What is Accidental Death and Dismemberment Insurance or AD&D?

Have you ever asked yourself what would happen to you and your family if you had a serious accident and lost a limb or even your life? Your health insurance will most certainly not cover all the care you could need if you lose a vital part of your body, and will of course not be of any help if you pass away. This is why it’s a good idea to purchase a supplemental insurance plan. To make sure you’re covered in these types of situations, a policy known as accidental death and dismemberment insurance is your best option.

Supplemental health insurance plans will ensure that you are covered in the event that you are the victim of an accident, so that you don't have to spend your savings or go into debt to maintain your family’s lifestyle.

Here we will explain what supplemental insurance is and why you might want to consider purchasing accidental death and dismemberment insurance.

Accidental Death and Dismemberment Insurance: Article Contents

Accidents: An Unexpected Health Problem

What is Accidental Death and Dismemberment Insurance or AD&D?

What are the Advantages of Having AD&D Insurance?

Accidents: An Unexpected Health Issue

Accidents can happen to anyone at any time. While driving, at work, playing sports...There is never any warning, and many times they can have catastrophic effects. In 2017, the National Safety Council registered 40.7 million unintentional injuries in the United States. This number gives you a sense of how many accidents occur each year in the US. But there is an even more terrifying statistic: almost 170,000 people die from accidents each year, which makes this the third leading cause of death in the United States.

As you can see, accidents do happen, and frequently. This is a good reason for you to have some type of insurance to help protect you when unexpected events occur. A good option is to purchase life insurance, which provides a payout in the event of death. Another is purchasing accident insurance, which will cover the costs resulting from an injury, including medical attention, transportation, hospitalization, and rehabilitation. This is not a mandatory health insurance policy, but a supplemental policy. This means that it is not included in the Affordable Health Care Act known as Obamacare.

There is also another intermediary option designed for accidents that can result in death or disability due to loss of a limb. These policies are known as Accidental Death and Dismemberment or AD&D plans.

Just like accident insurance, they are also supplemental plans, and are a combination between accident and life insurance. However, you shouldn’t consider them as a replacement for either type of insurance, and instead see them as what they are: supplemental health insurance.

What is Accidental Death and Dismemberment Insurance or AD&D?

If you are interested in learning more about this type of insurance, you should understand how it works and the specific cases in which it will pay a death benefit or payout.

Accidental death and dismemberment insurance consists of a policy and a death benefit that is also known as the policy’s face value. This is the sum of money the insured will receive, when applicable.

The funds will be paid in full if the insured dies as the result of an accident. This means that the benefit will not be paid out if they die as the result of natural causes, old age, illness, war, crime, or suicide. It also excludes death caused by surgery, a drug overdose or poisoning, death occurring when the person is under the influence of alcohol or medications not prescribed by a doctor, or if they die while committing a serious crime. Lastly, they also usually exclude deaths occurring while engaging in sports activities.

This means that the accidents must be provable and completely unexpected, such as a work accident, traffic accident, or other type of truly accidental situation. The death can also occur some time after the accident, but must be a direct result of the accident. For AD&D insurance, the waiting period is usually three months.

When death occurs in these cases, similar to life insurance, beneficiaries can be direct family members or anyone designated by the insured. The money they receive can help them to maintain their lifestyle, cover funeral expenses, and in general move forward with a little less stress.

On one hand, in the event of dismemberment, you will receive a stipulated amount depending on the severity of the damages. Losing a finger is not the same as losing a foot or your entire leg, because the level of disability will vary. The policy determines what percentage of the face amount will be paid out based on how serious your disability is.

It covers dismemberment ranging from the loss of a limb (an extremity, for example) to the loss of a vital organ, or one of the five senses (such as vision or hearing) or a faculty, such as speech. Paralysis and other injuries are also included in this type of policy.

In some cases, policies provide double payment if the injuries or death are caused by public transport accidents, like buses, trains, planes, and even taxis.

You can use the money you receive from the payout for the accident to pay for medical treatment, medication, transportation, hospitalization, and the rehabilitation necessary to recover. In addition, you can also use the money to maintain you or your family’s standard of living or cover any other necessary expenses.

QUIZ: Find out if a supplemental insurance plan is right for you

What are the Advantages of Having AD&D Insurance?

As you can see, an accidental death and dismemberment policy can be a good supplement to your heath insurance coverage as it covers gaps present in conventional plans. The main advantages of AD&D insurance are:

• Affordability. AD&D is much more affordable than accident or life insurance. You can have access to coverage at a minimal cost. In fact, in many cases you can access these products as add-on clauses with other policies rather than an independent policy. This allows you to purchase an AD&D clause to supplement a life or accident insurance policy. In practice, this means that you will have life insurance at a very competitive price, though it’s important to remember that the death benefit will never be as high as that offered by a conventional life insurance policy.

• Specialized coverage. Coverage of this type is very concrete and can only be used in very specific situations. This allows you to have a very specialized and affordable plan that will ensure that very specific needs are covered. If, for example, you are concerned about getting into a car accident, but the risk is fairly low because you don’t travel often, a policy like this might be enough.

• Crossed policies. It’s a good idea to have several supplemental insurance policies that work together. For example, an interesting option is to combine AD&D insurance with hospital indemnity insurance or a final expense policy.

In summary, although it can’t fully replace life or accident insurance, accidental death and dismemberment insurance is an attractive alternative to supplement your health insurance coverage.