Monday, 11 May 2020

Most people buy insurance for financial protection from unexpected events, such as storm damage to their home, a sudden illness or a car crash. Similarly, accidental death and dismemberment insurance (AD&D), can provide financial protection in the event of a serious or fatal accident.

What is accidental death and dismemberment insurance?

As the name implies, accidental death and dismemberment insurance policies provide a financial benefit if the insured is killed, or loses a limb or the use of a limb in a covered accident. Most AD&D insurance also covers the loss of sight, hearing and speech as the result of an accident.

What types of accidents are covered by accidental death and dismemberment insurance?

Coverage varies, but AD&D insurance typically covers death or dismemberment from accidents that have no other associated cause. Examples of covered accidents could include injury or death caused by falls, drowning or auto accidents. A death caused by cancer, for example, would not be covered since it isn't an accident.

What types of accidents aren't covered by accidental death and dismemberment insurance insurance?

In most cases, AD&D coverage does not provide a benefit if death or dismemberment is caused by a medical illness, self harm or substance-related accidents. In addition, most policies do not cover high-risk activities, such as skydiving and snorkeling.

How does accidental death and dismemberment coverage work?

Again, benefits and coverage vary by policy, but most AD&D insurance policies pay the full benefit amount to the beneficiary if the insured is killed in a covered accident.

For dismemberment or loss of sight, hearing or speech, the amount of the benefit is usually based on the severity of the injury or loss. For example, losing both legs in a covered accident would likely result in a bigger payout than losing a finger.

With most AD&D insurance, the amount of the payout decreases after the insured turns 70. And, in most cases, spouses and dependent children can have AD&D coverage on a family policy but the benefit is usually less than that of the primary policyholder.

As with any insurance policy, you can make adjustments to AD&D coverage based on your exact needs.

Does accidental death and dismemberment insurance provide anything other than a cash benefit?

Depending on the policy, AD&D can cover some expenses related to the death or injury, such as funds for rehabilitation. Some family policies can provide additional benefits to cover education or training of a surviving spouse or education expenses for surviving children.

Do I need both life insurance and accidental death and dismemberment insurance?

Ideally, yes. Life insurance covers many more causes of death, such as natural causes and illnesses, while AD&D only covers accidental deaths. Often, life insurance and accidental death and dismemberment insurance are sold together. When they are combined and the insured's death is ruled accidental, both policies pay, resulting in a larger death benefit. What's more, life insurance doesn't provide any coverage for serious and disabling injuries resulting from an accident, which AD&D insurance does.

Do I need accidental death and dismemberment insurance if I have a low-risk lifestyle?

The answer is yes. In fact, the Centers for Disease Control shows the number of U.S. deaths from accidents rose by 5.3% between 2016 and 2017 to their highest number in recorded history at nearly 170,000.

No one wants to think about becoming a statistic. Accidental death and dismemberment insurance is an affordable way to provide an extra layer of financial protection for you and your family in the event of an accidental tragedy.

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