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Accidental death and dismemberment insurance (AD&D) protects against accidental deaths and dismemberment that could happen on the job or off the job. But is accidental death insurance right for you?

Accidental death and dismemberment Insurance

Accidental death and dismemberment insurance (AD&D) can help your family if the unthinkable happens. AD&D coverage kicks in if you die in a fatal accident or become disabled. There are exemptions, though.

Many companies offer their employees free AD&D insurance as part of their benefits package. These policies provide assistance, but it's often for smaller coverage than if you bought an AD&D insurance policy yourself.

Let's take a look at AD&D insurance, what it covers, what it doesn't cover and how to get a policy.

KEY TAKEAWAYS
  • Accidental death and dismemberment Insurance (AD&D) is an insurance policy that offers coverage in case a person dies or becomes disabled.
  • AD&D insurance is not a replacement for life insurance. It only covers accidents, not natural death or injury from illness.
  • You can purchase AD&D insurance as a separate product or endorsement on your life insurance policy.
  • AD&D insurance premiums are as low as $60 per year, depending on the amount of coverage you buy and the benefits it provides.

What is AD&D insurance?

AD&D insurance pays the insured or your beneficiaries a set amount of money if your death or dismemberment is the result of an accident. AD&D is a limited form of insurance that covers only accidents. However, there are coverage restrictions that make accidental death and dismemberment insurance far less useful than life insurance policies. 

You can also add an accidental death rider to your life insurance. If, for example, you have a $100,000 life insurance policy and you add an accidental death rider and you're killed in a covered accident, your beneficiaries would get $200,000 for the death benefit. The fact that it can pay twice as much as normal is why it's sometimes called "double indemnity."

You shouldn't consider AD&D insurance as a replacement for life insurance. AD&D coverage is limited to accidents and it doesn't provide the kind of coverage you find in life insurance. AD&D is also not a replacement for disability insurance.

What does AD&D insurance cover?

If a fatal accident or an accident results in you losing your eyesight, speech, hearing or a limb, AD&D will pay you or your beneficiaries a specified amount. However, there are restrictions and exclusions. Your injuries or death usually must occur within a few months of the accident date to receive benefits related to an accident. Also, you will only collect benefits if your death or injuries are proven, direct results of the accident.

Dismemberment coverage works on a "per-member" basis. If you lose one member (a hand, foot, limb, sight in one eye, speech or hearing), the insurance company will usually pay 50% of the full benefit. If you lose two members, you will receive the whole benefit. Coverage amounts for partial or complete paralysis vary but are usually 25 or 50%.

Optional coverages sometimes include hospital stay coverage due to an accident and spouse and child AD&D coverage.

What does AD&D insurance not cover?

Typical exclusions of AD&D coverage include:

  • Death during surgery
  • Death resulting from a mental or physical illness
  • Bacterial infection
  • Hernia
  • Drug overdose
  • Skydiving
  • Car racing
  • Drunk driving
  • War

Make sure to read the fine print when applying for AD&D coverage.

Where to buy AD&D insurance

You can generally purchase accidental death and dismemberment insurance as a separate policy or rider (endorsement) on a life insurance policy.

Major insurers typically issue AD&D policies and can also be purchased through credit card offers or credit unions. Some life insurance companies may include or offer AD&D in their group insurance plans.

What does AD&D insurance cost?

Depending on the amount of coverage purchased and the benefits it provides, AD&D insurance premiums can cost as little as $60 per year.

The low cost of accidental death and dismemberment insurance also means it doesn't provide much benefit. In fact, it usually only offers a small amount of peace of mind. It's generally more cost-effective to put the money you'd be paying toward the premium into a standard life or other insurance policy instead.

Also, employers often offer AD&D insurance as a part of their benefits package. These group policies usually have lower benefits than individual policies. They're often limited to employees, so they're nice to have for that price, but you lose that coverage when you change jobs or if the employer drops it.

Will AD&D insurance really help?

An AD&D policy may be a good idea, especially if you work in a high-risk job. People with riskier jobs pay higher premiums than people with low-risk employment.

Supplemental AD&D coverage could be a wise investment regardless, but understand that AD&D doesn't cover you for any type of death or dismemberment. You should still have life insurance to cover you in case of death. If you're concerned about becoming disabled, you should get a separate disability insurance policy, so you're assured you'll receive benefits if you're unable to work.

Think of AD&D insurance as a supplemental policy to your life and disability insurance policies. Supplemental AD&D can play a critical role, but it's wise to think of it as added protection rather than solely relying on AD&D coverage.

Pros and cons of accidental death and dismemberment insurance

An insurance policy with accidental death and dismemberment coverage comes with several advantages and disadvantages.

AD&D coverage pros

On the positive side, it provides financial assistance after accidental death or loss of one or more limbs, supplementing income loss after one of these events occurs. It also costs less than traditional life insurance.

"This coverage is cheap in comparison to conventional life insurance and is often offered at little or no cost as part of an employer-sponsored benefits package," notes Brian Martucci, the Minneapolis-based finance editor for Money Crashers.

What's more, there is no medical exam required for AD&D coverage and no waiting period involved before the coverage takes effect.

"Also, benefits are payable for losses that occur within 365 days of the covered accident," says Mark Friedlander, director of corporate communications for the Insurance Information Institute in St. Johns, Florida. "And a variety of options are available to choose from, including high coverage limits."

AD&D insurance cons

On the downside, an AD&D policy only pays for certain events specifically listed in the policy. In other words, most deaths don't qualify as accidental.

"In this sense, it can provide a false sense of security if you lack adequate life insurance coverage. If you get your policy from your employer, the coverage will also end when you stop working for that employer," cautions Linda Chavez, the Los Angeles-based founder/CEO of Seniors Life Insurance Finder.

Additionally, depending on the AD&D insurance plan, your policy can include a benefit reduction schedule based on age.

"For example, your benefits may be reduced by 35% once you reach age 65 and up to 85% by age 80," Friedlander adds.

Are there additional accidental death and dismemberment insurance benefits?

An accidental death and dismemberment policy can serve as a nice supplement to term or permanent life insurance coverage. But additional benefits may apply, too. 

First, your policy may also provide living benefits compensation for injuries incurred due to particular types of accidents, like paralysis, loss of a foot, hand, leg, or arm, and blindness.

"If you lose one limb, you may qualify for 50% of your policy coverage amount. If two or more limbs were lost, you may qualify for 100% of your policy coverage amount," says Friedlander. "Also, the amount paid to you as living benefits may not be deducted from your policy's coverage amount, which may remain in full effect to help cover future injuries or death."

You may also qualify for up to triple payout on common carrier accidents.

"If you are injured or killed in an accident while riding as a fare-paying passenger on a bus, train, commercial airplane, ferry, cruise ship, taxi, or another type of common carrier, you may be entitled to double or even triple the coverage amount of your AD&D policy," Friedlander continues.

Note that some insurers provide an extra payout if you were wearing a seat belt during an accident that ended in death or injury.

"Additional benefits may also be provided to help your children pay for higher education, and counseling, legal, and financial advice for beneficiaries may also be an included extra benefit for a surviving spouse," says Chavez.

Some insurers offer other optional benefits as part of an enhanced AD&D plan, too, including benefits for:

  • Accelerated death
  • Accident hospital income
  • Adaptive home and vehicle
  • Anti-inflation
  • Bereavement counseling
  • Coma
  • Common disaster
  • Critical burn
  • Daycare
  • Funeral expense
  • HIV occupational accident
  • Loss of use
  • Newborn
  • Newlywed
  • Permanent total disability
  • Rehabilitation

Who should get accidental death and dismemberment insurance?

While anyone may benefit from AD&D coverage, good candidates include those who have jobs or pastimes that involve higher risk.

"People with risky hobbies or occupations are more likely to die or suffer serious injuries and accidents that are covered by AD&D policies," explains Martucci.

Got a beneficiary like a spouse and/or children who may be vulnerable to financial distress in the event of the loss of your life or limbs? If so, accidental death and dismemberment insurance "can be an affordable way to supplement your life insurance or medical coverage if you are seriously injured or die as a result of a covered accident," Friedlander says.

Be aware that if you have a riskier job, you will likely pay higher premiums than those with lower-risk vocations.

You may be wondering: Do I need both life insurance and AD&D coverage? Regardless of your risk status, Chavez says you should still have life insurance. 

"And if you fear that you will become disabled, you should probably purchase a separate disability insurance policy so that you can be sure to receive benefits if you are unable to work," recommends Chavez. "Consider AD&D insurance as a supplement to your life and disability insurance policies; it can play a crucial role, but it's wise to think of it as additional protection rather than relying solely on AD&D coverage."

How can you get accidental death and dismemberment insurance?

Many policyholders get their coverage at no cost from their employers. Find out if the company you work for provides a free or discounted AD&D policy as part of your employee benefits package.

"However, if you are not covered by a company plan, you can shop for individual coverage via an insurance professional who can provide you with multiple quotes from private insurers," suggests Friedlander.

Chavez advises searching for policies online and carefully comparing their features and costs. Count on performing necessary due diligence: Research the insurance company’s history and financial strength, read online reviews about the insurer and ask questions with an agent or customer service representative.

"You can start the application process by requesting a quote for an AD&D insurance policy. Your application will be reviewed, and if you meet the requirements, your approval is guaranteed," she adds.

Note that you'll need to purchase life insurance coverage at the same time if you want to buy accidental death and dismemberment coverage as a rider rather than a standalone policy.

Frequently asked questions

Is accidental death and dismemberment insurance worth it?

AD&D coverage is a no-brainer if it’s offered at no charge through your employer. But if you have to purchase coverage on your own, it pays to crunch the numbers and consider alternative forms of insurance.

"The good news is that accidental death and dismemberment insurance rates can be much lower than your average life insurance rates. But if you are young and healthy, you may be able to get a comparably good rate for term life insurance," says Chavez.

If you have a risky occupation or hobby or travel frequently, this coverage could be worth the cost.

"For homebodies who are quite unlikely to die or get injured accidentally, it's probably not worth it," Martucci says.

What's the difference between accidental death and dismemberment insurance and life insurance?

AD&D insurance is not the same as term life or permanent life insurance. Life insurance policies typically cover the vast majority of deaths.

Accidental death and dismemberment insurance is much narrower in scope: It only covers certain kinds of accidental death and certain injuries that result in the loss of use of your body parts, like eyes and limbs.

Friedlander explains that "term life insurance is purchased for a defined period. If you die within that period, your family will receive the money from your life insurance policy. Accidental death and dismemberment coverage, by contrast, is usually supplemental to life insurance. It can be purchased as its own policy or as a rider to a life insurance policy."

Is a heart attack considered an accidental death?

Insurance carriers typically define a heart attack death as a type of natural death that doesn't qualify for AD&D benefits.

"Accidental death and dismemberment policies generally don't cover cardiac arrest caused by trauma, surgical complications, drug overdoses, or other unnatural causes either," notes Martucci.

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