Accidental Death And Dismemberment Insurance: What Does It Cover?
Thousands of people die from accidents each year. In fact, according to the Center for Disease Control (CDC), accidents are one of the leading causes of death in the USA
Even though nobody wants to think about it happening to them, people may want to have accidental death and dismemberment insurance (AD&D insurance) just in case. This type of insurance policy helps ensure that individuals and their families are fully protected in case something unfortunate happens in the future.
In this article, we'll talk about what's covered by accidental death and dismemberment insurance. We'll also answer the most frequently asked questions on this topic.
What Is Accidental Death And Dismemberment Insurance?
Accidental death and dismemberment insurance covers policyholders in case they get involved in an accident. Generally, AD&D insurance pays your beneficiary a lump sum death benefit in case you die in an accident. It also pays out partial living benefits in the case of dismemberment.
AD&D Insurance vs Life Insurance
A standalone AD&D insurance policy is different from regular life insurance because it only pays out the benefit in case the insured person gets involved in an accident. Meanwhile, regular life insurance covers death due to natural causes, like cancer or pneumonia.
For this reason, an AD&D policy is generally not considered an alternative option to regular life insurance, which offers more robust coverage. Instead, AD&D should be treated as a supplemental policy.
Another key difference is that an accidental death insurance policy pays out part of the coverage amount for severe non-fatal injuries, like the loss of a limb. A typical whole or term life insurance policy will not pay out the benefit for injuries that did not result in death.
AD&D Insurance vs AD&D Life Insurance Riders
Accidental death and dismemberment insurance can come in the form of a life insurance rider instead of a standalone insurance policy. A rider is any add-on benefit on top of your whole life or term life insurance. Some types of travel insurance also include AD&D riders.
Most life insurance companies offer a "double indemnity" rider in the case of accidental death. This means beneficiaries can receive twice the coverage amount when the insured person dies of an accident.
What Does AD&D Insurance Cover?
What life insurance companies consider as an "accident" isn't black and white. In this section, we'll look more closely at the types of events that usually qualify as accidental death or injury.
Keep in mind that the list below should only serve as an example. Each insurance company has a specific list of accidents and dismemberment that they cover, so the items mentioned in this section may not be exactly the same as the specific AD&D policy being offered to you.
What Qualifies As Accidental Death?
An accident refers to an unlikely event that resulted in an injury. They can include the following:
Accidents involving heavy equipment
Accidents while riding public transportation (bus, train, or airplane)
Since death may not follow instantly after an accident, beneficiaries can still make a claim in case the insured person dies of their injuries within a specified time frame, which can range from 90 or 181 days. Refer to your AD&D insurance policy document for more information.
Note that some insurance companies provide a "seatbelt benefit" where they provide beneficiaries additional money if the insured person was found wearing their seatbelt properly when they died from a vehicular accident.
What Qualifies As Accidental Dismemberment?
Typically, AD&D insurance policies give policy owners the right to claim a percentage of their policy's face value in case they get into an accident that results in the following:
Partial or permanent paralysis
Loss of sight, hearing, or speech
Loss of limb (paraplegia, quadriplegia, hemiplegia, or uniplegia)
Loss of thumb and index finger on one hand
It's unlikely that life insurance companies will pay 100% of the benefit unless the insured person experiences the loss of both limbs or total loss of major bodily functions. The AD&D life insurance policy document should contain what percentage you can receive in case you experience any of these types of dismemberment, so refer to it for more information.
What Is Not Covered By AD&D?
Exclusions vary depending on the insurer, so it's best to read the fine print carefully. It's common for accidental death and dismemberment insurance policy to exclude any injuries due to the following:
Natural causes (illness, heart attacks, etc.)
High-risk hobbies, like car racing, skydiving, and bungee jumping
Suicide or attempted suicide
Death or injury while under the influence of nonprescription drugs
Death or injury gained while engaging in a felonious act
Participating in a riot
Participating in a war
Participating in collegiate and professional sporting events
Riding an off-road vehicle
Piloting an aircraft
Keep in mind that insurers only cover injuries that are directly caused by accidents. For example, if someone got into a car crash because they suffered a heart attack while driving, their death or injury might not be covered by AD&D insurance.
Frequently Asked Questions On AD&D
Now that we've covered the definition of accidental death insurance and the types of events it insures against, let's answer some of the frequently asked questions about this matter.
Who Is Eligible For This Insurance Policy?
One of the key aspects of AD&D insurance is that it does not require a medical exam. Applying for this type of insurance also does not require people to answer questions about their health.
The only qualification is usually your age. Most life insurance companies only issue AD&D policies to people between the ages of 18 to 70.
With that said, accidental death insurance is quite useful for people with preexisting conditions that would disqualify them from getting a typical whole life or term life insurance. AD&D insurance is also quite ideal for young people who cannot afford another type of life insurance policy.
Is There A Waiting Period?
Generally, there's no waiting period for an accidental death insurance policy. You can get coverage within days after starting the application process. However, some life insurance companies require that your initial contribution has been paid.
Will My Employer Provide AD&D Insurance?
Some employers offer accidental death and dismemberment insurance as part of their employee benefits package. According to a survey by the Society for Human Resource Management, 83% of employers surveyed provided this benefit to employees in 2019. Note that some employer group plans may also give you the option to buy AD&D insurance for your family.
Keep in mind that you're likely going to lose your accident insurance coverage if you quit or lose your job. So, if you want to ensure you're protected even when you're unemployed, you can opt to buy a voluntary AD&D insurance policy.
How Much Is The Coverage?
The coverage amount for an AD&D policy can range from $37,500 to $200,000. This amount is generally lower than the death benefit from a whole or term life policy. So, it's best to use it as a supplementary policy rather than a primary source of financial protection.
How Much Will I Pay For AD&D Insurance?
The premium payments for AD&D insurance will be closely tied to the amount of coverage you choose. For example, you may be asked to pay $6 per month for $100,000 accidental death coverage. For coverage amounting to $500,000., you might pay around $30 per month.
Aside from the coverage amount, your occupation and hobbies will play a huge role when computing how much your premium payments will be, especially if they’re particularly dangerous or high-risk.
How Can Beneficiaries Claim Benefits?
Most insurance companies will require proof of the accident, an autopsy, and an official investigation of an accident whenever a beneficiary files a claim. It's also important for your beneficiaries to have a copy of the original policy document, so don't forget to let them know where to find it in case of an emergency.
Getting a serious injury from an accident can be devastating to individuals and their families. Plus, the medical and legal fees that they'll need to pay as a result of these accidents may leave them troubled financially.