Accidental death and dismemberment life insurance (AD & D) provides you or your designated beneficiaries a predetermined amount of money only if you die in an accident or if the mishap caused you to lose a limb, eyesight, hearing or speaking abilities. When it comes to AD & D, Insure.com says it's important to read the fine print because these types of policies can contain restrictions and reduced payouts in some cases.
What Are the Odds?
If you believe there's good chance you will die or become dismembered as the direct result of an accident, it might be wise to have an AD & D policy in place. Bear in mind however, if you have a high-risk occupation or avocation, you'll have to pay a higher premium for coverage.
Statistics
According to the Centers for Disease Control and Prevention, unintentional injury deaths ranked fifth in its 2006 list of the top 15 causes of death in the United States. More than 121,000 people died in some type of accident, such as automobile wrecks and falls. In comparison, heart disease, the No. 1 cause of death, claimed 631,000 lives. People under age 40 are more apt to die from accidental causes than natural causes.
Exclusions
The definition of accident leaves little wiggle room for interpretation when it comes to AD & D insurance. For instance, if you suffer a fatal heart attack while driving and this leads to a car accident, your beneficiaries would not be eligible for any payment. In the event you intentionally harm yourself or commit suicide, again there would be no payout.
Restrictions
In order to receive accident-related benefits, your death or injuries must take place within a certain period of time after the accident. This is usually a few months. The dismemberment aspect of AD & D coverage literally works on a percentage basis based on "members" lost. If you lose one member, such as one foot or one eye, the insurance company generally pays 50 percent of the full payout.
Double Indemnity
Accidental death and dismemberment insurance can usually be purchased as a separate (rider) policy on a standard life insurance policy. According to Insurance.com, if you had a $200,000 basic life policy and died in a qualifying accident, your beneficiaries would stand to receive $400,000 when the rider benefits are added. This is often referred to as "double indemnity."
Purchasing AD & D
AD & D insurance policies are commonly issued by major insurance companies. They can also be obtained via credit card offers or credit unions. Some insurers may provide AD & D in their group insurance coverage.
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