Insurance Services: Death and Dismemberment

Most people have heard about life insurance. But how much do you know about death insurance? Accidental death and dismemberment insurance, also known as AD&D insurance, is an important category of coverage to understand.

What Is Accidental Death and Dismemberment Insurance?

Like any type of insurance, AD&D insurance requires policyholders to pay a monthly or yearly premium. In return, policyholders will receive a financial payout if a certain set of circumstances occur. In the case of AD&D insurance, benefits are received if the policyholder experiences death, loss of limb or loss of function of a limb, due to a covered accident. The payout will go either to the policyholder, or the policyholder’s next of kin in the case of death.

Who Needs AD&D Insurance?

Accidental death and dismemberment insurance is highly recommended for people who work in dangerous fields, including logging, roofing, industrial manufacturing, construction and so on. In these cases, AD&D insurance can give the policyholder and their family some peace of mind that if the worst should occur, there is some financial protection in place.

The benefit of AD&D insurance over workers comp is that AD&D insurance covers the policyholder no matter where the accident takes place—so if the accident is unrelated to a job but nevertheless interferes with the policyholder’s employment, they’re still covered for at least some of the resulting financial losses.

What Accidents Are Covered?

Every death and dismemberment policy is different, but in general, an AD&D insurance policy will cover any unintentional occurrence leading to death, loss of a limb, inability to use fingers, eyes or ears, loss or partial loss of limb function, and so on. Most policies cover car accidents, accidents which occur on public transportation, fire, falling objects, bodily harm caused by another person, and some natural events such as being struck by lightning.

Illness, high-risk activities or any situation caused by the policyholder won’t be covered. Driving under the influence of alcohol, losing a limb as a result of diabetes or getting injured while committing a crime are all examples of incidents that don’t fall under AD&D coverage and won’t receive a payout. Remember also that while a sudden-onset healthcare situation such as a heart attack might be unexpected, it’s considered a natural cause of death and won’t be covered by AD&D insurance.

What’s the Cost?

The cost of AD&D insurance is usually $10 or less per month—fairly affordable in the world of insurance. Indeed, accidental death and dismemberment insurance is often a rider on traditional life or health insurance policies, meaning you either pay a little more for this benefit, or receive it for free as a perk of coverage. Some workplace insurance packages will also include AD&D as part of their offering to employees.

While AD&D insurance is more affordable than life insurance, it’s also not a replacement for life insurance. If death occurs outside of the circumstances laid out by the AD&D policy, there’s no payout to remaining family members; no matter how many months of premiums have been paid. Be sure to speak with an insurance advisor about what coverage makes the most sense for you.