Accidental Death and Dismemberment Insurance (AD&D)

Posted in Life Insurance

January 9th, 2009

The term AD&D refers to Accidental Death and Dismemberment Insurance. This type of insurance is generally offered as supplemental insurance on a basic life or health insurance policy. As you may have surmised from its name, an AD&D policy pays out a benefit to you or your beneficiaries in case you die or are dismembered in an accident. However, there are limitations to the coverage, and these vary from carrier to carrier.

For instance, the definition of accidental death may only include certain types of accidents, which may limit the circumstances under which your death will qualify as an accidental death claim. Shootings, stabbings, plane crashes, an accidental fall or a hunting accident are all accidents that are generally recognized under most AD&D policies. However, if you die as a result of an accident during surgery, a mental illness, a bacterial infection, or an accidental drug overdose, your accident may not be covered. Similarly, alcohol-related accidents, or those resulting from an act of god such as a tornado or flood, while certainly not intentional, might not be covered under this policy.

The stipulation for dismemberment insurance can also vary widely, as the percentage of the total benefit for dismemberment depends on the number of members lost in an accident. For example, if your arm was caught in a machine in an industrial accident, for the loss of your arm, you might receive 50 percent of the total benefit. However, if you only lost two fingers, the fact that you lost two members might entitle you to a higher benefit. Multiple accidental injuries (losing a hand, foot, or the sight in one or both eyes) may result in up to five times your initial benefit.

Additionally, in order to collect on your AD&D benefits in the event of an accident, your injury or death must occur within three months of the accident date, and be proven to be a direct result of the accident. For example: if, as a result of the loss of your two fingers, you developed gangrene in your arm and had to have it amputated a month later, your arm would be considered a loss under the AD&D policy, and would be covered by your insurance. However, if the condition did not develop until three months later, it would not be covered.

Its important to read the stipulations closely and be aware of the limitations of your coverage when you apply for this kind of policy, as they may be a deciding factor in determining whether this is the best life insurance policy option to add to your existing coverage.