What is accidental death and dismemberment insurance?
Accidental death and dismemberment insurance (AD&D) is generally an addendum to health or life insurance. The runner covers the involuntary death or dismemberment of the insured. Mutilation includes the loss or loss of use of body parts or functions (for example, limbs, speech, sight, or hearing). Due to coverage limitations, potential buyers should read the terms of the policy carefully.
Accidental death and dismemberment insurance
Understanding accidental death and dismemberment insurance
The AD&D policy contains a calendar which details the terms and percentages of the various services and the special circumstances covered. For example, if an insured dies as a result of injuries sustained in an accident, death must occur within a specified time for benefits to be paid.
When adding an AD&D endorsement, also called a double indemnity endorsement, to a life insurance policy, the designated beneficiaries receive benefits from both in the event of the accidental death of the insured. The benefits generally cannot exceed a certain amount. Most insurers cap the amount payable in these circumstances. Since most AD&D payments generally reflect the face value of the original life insurance policy, the beneficiary receives a benefit twice the face amount of the life insurance policy upon accidental death of the insured.
In general, accidental deaths cover exceptional circumstances, such as exposure to the elements, traffic accidents, homicides, falls, drownings and accidents involving heavy equipment.
As a general rule, AD&D policy pays a percentage for loss of a limb, partial or permanent paralysis, or loss of use of specific body parts, such as loss of sight, hearing or the speech. The types and extent of injuries covered are specific and defined by each insurer and policy. It is rare for a policy to pay 100% of the policy amount for nothing less than a combination of the loss of a limb and the loss of major bodily function, such as sight or hearing in the minus one eye or one ear.
Voluntary accidental death and dismemberment insurance (VAD & D) is a financial protection plan which provides the beneficiary with money in the event of accidental death or loss of a body part by the policyholder. VAD & D is a limited form of life insurance and is generally less expensive than a full life insurance policy.
Voluntary accidental death and dismemberment insurance (VAD & D) is an optional benefit offered by some employers. Premiums are based on the amount of insurance purchased, and this type of insurance is generally purchased by workers in occupations that put them at high risk of physical injury. Most policies are renewed periodically with revised conditions.
The amount that such a policy pays depends not only on the amount of coverage purchased, but also on the type of claim filed. For example, the police can pay 100% if the policyholder is killed or becomes quadriplegic, but only 50% for the loss of one hand or the permanent loss of hearing or sight in one ear.
Common AD&D exclusions
Each insurer includes a list of circumstances excluded from coverage. In most cases, the list includes suicide, death from disease or natural causes and war injuries. Other common exclusions include death from an overdose of toxic substances, death under the influence of over-the-counter medications, and the injury or death of a professional athlete at a sporting event. Usually, if the loss of the insured occurs as a result of his criminal act, no benefit is payable.