- Life Insurance

Accidental Death/Dismemberment Life Insurance

Accidental death and dismemberment (AD&D) insurance provides coverage for death, the loss of a limb or permanent loss of eyesight or hearing as the result of an accident. AD&D insurance is often added to a basic life insurance policy as a rider, with a small additional premium, which doubles or triples the usual coverage in the event of accidental death or dismemberment. Policies are also available as accidental death only, without dismemberment. Because AD&D coverage is very narrow, the premiums tend to be small. AD&D policies are often sold through credit card or store card offers.

For the AD&D policy to pay out, the death, loss of limbs, eyesight or hearing must be as a direct result of injuries suffered in the accident and must occur within a set timeframe, usually three months. With dismemberment coverage, a “member” is categorized as a limb, hand, foot, the sight in one eye or the hearing in one ear. Most policies pay the full benefit for the loss of two members, 50% for the loss of one member, 25% for the loss of a thumb and finger and nothing for the loss of one digit. Some policies pay out larger benefits if the death or dismemberment occurs on a “common carrier” (an airplane, bus, subway or train).

AD&D policies tend to exclude death and injury resulting from inherently dangerous activities such as sky diving, parachuting, bungee jumping, extreme sports, flying an airplane and mountaineering. Other common exclusions include: physical or mental illness, suicide or intentional self harm, the use of illegal drugs, driving a vehicle while intoxicated and being a combatant in a war.

The likelihood of dying or losing limbs in an accident is low. Those who work in higher risk jobs like construction have a higher risk of accidental death and injury but their premiums for AD&D insurance are also likely to be higher. Given the limited coverage of AD&D insurance, it may be better to put the additional premiums towards enhanced life, disability or health insurance. Other forms of life insurance, including term, whole and universal life policies, cover accidental death as well as death from natural causes.