According to the Centers for Disease Control and Prevention, accidents are the third leading cause of death in the United States after heart disease and cancer. In fact, research shows that they are the #1 cause of death among adults aged 25 to 44. Therefore, it makes sense to have an accidental death and dismemberment insurance policy that provides comprehensive coverage for accidental deaths.
But what exactly is accidental death and dismemberment insurance cover, and how does it work? When should you go for it? Read on to find out everything you need to know about this insurance policy.
What Is Accidental Death & Dismemberment Insurance?
Accidental death and dismemberment insurance, commonly referred to as AD&D, is a type of insurance that pays out in case you die or get injured in an accident. In this case, dismemberment refers to a loss of a limb or critical body function such as speech, sight, or hearing.
Typically, the beneficiary you name in your policy document will receive a lump-sum payment if you die. In case you are only injured, you can still receive living benefits. However, the amount of money you receive will largely depend on the type of injury.
For instance, an AD&D insurance policy might pay you 50% of the total coverage amount if you lose one thing i.e., a foot, hand, or sight in one eye, and 100% if you lose two or more things. Some policy providers will also pay you a significant portion of the coverage amount if a section of your body is paralyzed.
You can view accidental death and dismemberment insurance as a limited form of life insurance that will only cover you in accidents. However, there are certain restrictions to AD&D that make it less useful compared to a life insurance policy.
The best way to make use of AD& D is to add it as a rider to your life insurance policy. For instance, if you had $200,000 life insurance policy coverage with accidental death insurance as a rider and you die in a covered accident, your beneficiary will receive a total of $400,000 as the death benefit.
The fact that AD&D can pay as much as a normal life insurance policy is why it is sometimes referred to as “double indemnity.”
Example of How AD&D Works
Are you wondering how an accidental death and dismemberment insurance can apply in real life?
Let us assume you are driving down the highway and accidentally veer in front of an oil truck that crushes you to death. In such a case, your death will be treated as an accident, and your beneficiary will receive full compensation.
However, if it is established that you had a heart attack while driving and that is what caused you to veer in front of the oil truck, your beneficiary won’t receive compensation because that isn’t deemed as an accident. In such a case, your cause of death may be recorded as a “heart attack.”
What Does AD&D Insurance Cover?
Typically, AD&D insurance will cover injuries and deaths from accidents. It doesn’t cover fatalities and injuries occurring due to natural causes or illnesses. So, no heart attacks, strokes, or any other disease.
This type of policy will only cover injuries or death from accidents that may occur at home, workplace, or while traveling.
If your death results from an accident while using public means of transport such as bus, airplane, or train, the payout can be up to three times the amount of your base coverage.
For your beneficiary to receive a death benefit, a death from an accident doesn’t have to be instant. However, it must occur within a certain time frame. Your policy document will outline all the conditions.
What Does AD&D Insurance Not Cover?
Some of the typical exclusions of accidental death and dismemberment insurance policy coverage include:
- Death during surgery
- Bacterial infection
- Death resulting from mental or physical illness
- Drunk driving
- Drug overdose
- Car racing
AD&D will only payout for deaths that occur as a result of unexpected accidents. Dying from skydiving or car racing isn’t considered an accident. In such cases, the insurance provider will argue that you assumed some level of risk when engaging in certain activities. Life insurance usually pays out for more causes of death than AD&D.
Should You Go for AD&D Insurance?
You may be wondering if purchasing AD&D insurance is really a good idea if you already have health and life insurance policies. The answer is both yes and no.
If you work in high-risk environments, purchasing AD&D might be a good idea. Typically, people who work in high-risk environments are at an increased risk of death or dismemberment compared to their counterparts in low-risk professions.
In such cases, carrying AD&D insurance could be a good idea, regardless of whether you have a life insurance policy or not. If you are worried about being incapacitated, ensure you purchase a separate disability insurance policy to be sure of receiving benefits if you are unable to work.
You should only think of AD&D insurance as a supplemental policy to your disability and life insurance policies. Although AD&D can still play a critical role in your life, it is always good to think of it as added protection.
How Do I Get AD&D Insurance?
Some insurance companies offer AD&D insurance as an add-on or rider to your life insurance policy. Some employers also offer it as part of employee benefits. However, other insurance providers offer it as an independent policy.
If you decide to purchase AD&D insurance, make sure you weigh the benefits and know what it covers. Some policies may have stringent limitations on what an “accident” is. Make sure you buy something that can help you or your loved ones should the unexpected happen.
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Are you looking to purchase an accidental death and dismemberment insurance policy but don’t know where to start? Our team of experienced and licensed insurance agents is here to help you. Talk to us today and let us help you find the most affordable option in the market that will meet your unique needs!