Accidental death & dismemberment (AD&D) insurance

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You might have noticed that your company offers accidental death and dismemberment insurance. This is a perk that many companies offer and which you can also get as an individual. Few employees know what it is and how it can benefit them. The most frequent question HR departments are asked is whether accidental deaths insurance is worthwhile.

What is insurance for accidental death and dismemberment?

This policy covers you in the event that you are injured or killed in an accident. This could include drowning or being struck by a tree. AD&D could be an rider or endorsement on existing life insurance policies or health insurance policies. It may also be a standalone policy.

An AD&D policy can be extended to partially pay you if you are injured or lose your arm.

Your payout will be based on how much you have lost. For example, if one leg is paralysed or lost, it might pay 50%, but if both are lost, it might pay 100%.

AD&D is a bit like term insurance but it’s not the same. AD&D only covers a small number of deaths, while a term-life insurance policy covers most types of death. AD&D, unlike a term policy does not include the dismemberment payout.

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Because they pay out claims less frequently, AD&D policies tend to be cheaper than term insurance. These policies often pay out less than term life insurance. This is especially true if the policy provides a benefit for employees. For example, a common policy could pay $10,000.

AD&D policies don’t generally require a medical examination. This makes them a good option for those with serious health issues who cannot get approved for life insurance. It is usually easy to get approval for coverage, even though there are not many requirements.

Voluntary AD&D

Unintentional injuries (accidents) are the third most common cause of death in the United States. This is particularly important in the workplace. This is where voluntary AD&D can play a significant part.

Insurance that covers voluntary accidental death and dismemberment is very popular among those who work in the most hazardous jobs . This optional coverage is added to an existing life or health insurance policy as an add-on. Because AD&D insurance differs from workers’ compensate in that it covers any accident that may affect your ability to earn a living.

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Voluntary AD&D insurance covers financial compensation for injuries or deaths caused by an accident. Your designated beneficiary will receive financial compensation if an injury, such as the loss of a limb, occurs. You may also be eligible for financial compensation for speech, hearing, or movement loss.

All injuries may not be eligible for the same amount of payment. Death could result in a full payout. However, you may only receive half the payout for injuries such as permanent hearing loss.

Although voluntary AD&D insurance has a limited range of protections, it’s generally cheaper than other types of insurance. However, like term insurance it must be renewed.

What is the process of AD&D insurance?

If you were killed in an accident, and you had a $100,000 accidental death & dismemberment insurance with your employer, your beneficiary will likely receive the entire amount. You would only receive 50% if you lose one leg in an accident.

Another example is if your AD&D coverage was an add-on to your term life insurance policy that was for $100,000. A concept known as double indemnity would allow you to receive a double payout in case of your death. It amounts to $200,000. You could be paid from your AD&D insurance but nothing from your term-life insurance if you are injured but not killed.

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An interesting fact is that many AD&D insurance policies will pay double, or even triple, for accidents occurring while you’re a fare-paying passengers on a bus or train, plane, ferry, taxi, or other form paid transportation.

If you are unable to afford one type of policy, insurance professionals suggest that you choose term life insurance. It pays out for a wider range of situations than AD&D, and can also be used as an extra benefit.

What is the coverage for accidental death and dismemberment?

AD&D covers accidental death or dismemberment from a variety of causes. These include death in a car accident or train accident, murder, plane crashes, falling objects, lightning strikes, fire, and any other mishap that results in you being dismembered or fatal.

There are important exclusions for AD&D policies. These exclusions can vary from one insurer to another, so make sure you carefully read your policy to see what is covered.

The following items will not be included:

  • A terminal illness such as diabetes or cancer can cause death
  • A drug overdose
  • Suicide or any other mental illness-related death
  • Skydiving, car racing and any other high-risk activity are all possible
  • Death or military injuries from war and conflict
  • Driving under the influence
  • Bacterial infections
  • Death during surgery
  • Death of a professional athlete at a sporting event
  • If you are convicted of a crime and die while it is being committed
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What life insurance companies offer AD&D coverage?

Most companies offering life insurance offer accidental death and dismemberment. However, some only sell policies to employers.

These are some of the insurance companies from which you can buy an AD&D policy endorsement.

  • AIGDirect — Policies available to anyone between 18 and 80; policies available to those in high-risk occupations like firefighters and police
  • Insubuy – policies that are available to individuals and groups
  • TruStage – Available for credit union members
  • Fabric – approval for coverage within minutes of application
  • SunLife — Pays 100% for quadriplegia, 75% for paraplegia
  • Protective – Adds AD&D riders for its life insurance policies
  • Aflac — Provides accident insurance for individuals or employees

Is accidental death insurance worthwhile?

A policy that covers AD&D may not be necessary for everyone, especially if there is a life insurance policy in place. It can be beneficial to add an AD&D rider or policy to your existing life insurance to give you greater peace of mind. It will only be paid if you die or are dismembered by accident.

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If you are unable or unwilling to purchase life insurance due to an underlying condition, AD&D policies cannot be considered a replacement for it. An AD&D policy can be a good backup plan if that is the case. If your employer offers an AD&D plan as part of your benefits package to you, accept it.

Questions frequently asked

Are there two types of life insurance?

It all depends on the type of life insurance policy that you have, and your financial goals. AD&D is not necessary if your life policy provides adequate coverage in the event of death or dismemberment. It may be worth considering if you work in high-risk occupations. Talk to an agent about the best coverage for you.

How is AD&D Compensation calculated?

Although every insurer is different, the general rule of thumb is that your policy will pay 100% of its total value in the event you are killed accidentally. The policy will usually pay out per member if you are dismembered. One eye may be worth 25%, while the payout for both eyes might be 50%. To determine the compensation structure of your policy, confirm amounts and circumstances with your provider.