What is AD&D Insurance?

Accidents and death are unimaginable, and at the same time, unpredictable. We can never know when it’ll occur and how will it happen, but one thing we know is that it will affect us and the people that surround us for sure. 

Due to these inevitable events, businesses created a solution we called “insurance”. Insurance is everywhere and in any form. It is designed to make us live with fewer worries about the future. Whenever misfortune occurs, we are somehow or somewhat confident that we can get assistance when we are insured. Insurance is not just any protection; it also serves as a trust fund that we can count on or collect in times of need. 

A monetary fund is indeed essential not only for our daily necessities but most especially for emergencies like unforeseen accidents. However, if we rely solely upon the savings we deposit to banks, we might end filing for bankruptcy. It is the main reason why everybody favors getting an insurance. 

One of many insurances available in the market is accidental death and dismemberment insurance, also known as AD&D insurance. This type of insurance grants compensation for your family if you got into an accident and as a result, you lost a part of your body or worse you died. It is somehow comparable to a life insurance policy, but only because it also offers a death benefit. On the other hand, they are different in many ways, and you cannot trade choosing this over life insurance. Why? Because there are certain restrictions to this insurance. For instance, your family or preferred beneficiary will not be able to get a hold of the payout you invested if you passed due to a disease (and not by accident). 

AD&D Insurance

AD&D insurance policy is basically composed of two separate and different guarantees: the accidental death coverage and dismemberment coverage. Each division of these two policies states its systematized term and condition independently. But take note, once you register to AD&D insurance, you have both blankets automatically. That means that you cannot buy accidental death coverage alone because the two comes together.  However, you can acquire AD&D insurance in its entirety individually or as an addition to another policy such as life insurance or term life insurance to be specific. You’ll get the same benefit to whichever is preferable for you. But let’s say, you are eligible for a hundred thousand dollar benefit under the life insurance you selected, plus you combined it to an accidental death rider. Once you pass away due to a covered accident stated in the policy, your successors can have a hundred thousand dollar from your life insurance. But, it does not just stop there. They also have another hundred thousand dollars from the AD&D insurance. This is the scenario why it is also called as “double indemnity” because your family can get double payout than the normal.

Reminder: As mentioned earlier, you shouldn’t consider AD&D insurance as a replacement for life insurance. The coverage of the AD&D plan is only limited to accidents and accidents alone; thus, this means that the level of protection it offers is not the same with life insurance coverage. 

An AD&D policy can only cost your pocket about $0.02 (two cents) monthly for $1,000 worth of coverage. You pay the full cost for your coverage through payroll deduction. Though AD&D costs this low, however, you cannot rely on your family’s protection purely on it. As previously discussed, you still have to enroll dependents to an insurance that provides a broader coverage since it’s not all the time that accident occurs; it can also be health issues and other events. 

Accidental Death Coverage 

Research shows that accident is one of the top 10 primary causes of death in countries like the U.S. and Canada. Teens and young adults are usually prone to this risk since they are adventurous and are likely to indulge in new breathtaking activities. Though AD&D is for everyone, it is recommended that people at their near retirement age should choose an insurance that helps them prepare for their retirement instead.

Accidents that are commonly covered by AD&D include the following events: 

  • accidental fall and drowning
  • exposure to the elements
  • traffic incidents or road collisions
  • common carrier accidents (trains, buses, public vehicles)
  • plane crash
  • accidents involving massive machinery or equipment
  • and if got murdered – for instance

Every insurance policy has its coverage limitation, and AD&D is not an exception to this. Extreme outdoor activities such as scuba diving and cliff diving/base jumping are usually excluded in the covered accidents. However, deadly hobbies are trending nowadays reason why some insurance companies extend the list of coverage to include these risks (but for a higher premium). Natural causes of death are also unwelcome to AD&D policy. These causes involve illnesses, surgical procedures, war, and suicide. Other exceptions include death due to the influence of any non-prescribed narcotics or liquor. Because of the said restrictions,  accidents are formally examined. The deceased insured also undergoes an autopsy before the insurer approves a claim. 

Dismemberment Coverage

If you got into an accident covered by the policy and incur a loss in some parts of your body, it is when dismemberment coverage is utilized. Covered loss includes sight, hearing, or speech, partial or permanent paralysis, and the loss of specific body parts such as legs and arms. Other than this commonly covered loss,  extended body damages/fractures included and the amount financed differ in each insurance company. Typically, covered loss and additional extended coverage are identified one by one in the contract.

So whenever an insured encounters accident that caused his loss of limb, AD&D will shoulder the payment of the disowned part.  As mentioned, the cost of finance for the loss of body parts are defined by the policy you signed in (depending on the type of insurer you chose). Payments usually come into percentage and are stated in the coverage, including a specific rate equivalent to each damaged part. The corresponding amount and loss part may be calculated individually or as a combination, depending on what is stated in the policy. Usually, you will get 50% of your death benefit as your dismemberment benefit if you lose one limb. Some insurer offers 100% of a death benefit for a multiple loss of limbs. But, it is rare for policy to pay 100% amount for anything less than a combination of the loss of a leg and a significant bodily function such as vision.

If you’re a risky individual who is likely to die or lose a limb due to an accident, then AD&D is the right insurance for you. Or if you’re occupation is prone to disasters like a site engineer – for example, then you should get AD&D insurance for sure. But remember, do not depend your life and future incident expenses to it, having an additional protection is a lot more reassuring.

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