What Is Accidental Death and Dismemberment (AD&D) Insurance?

Buying a life insurance policy will protect your dependents if you die, but it won’t provide a payout if you’re the victim of an accident that leaves you dismembered and physically impaired.

With an accidental death and dismemberment policy (AD&D), you or your beneficiaries will be paid a predetermined amount if you have a fatal accident or an accident that causes the loss of limbs, speech, eyesight, or hearing, says Ashley M. Hunter, an insurance underwriter and president of HM Risk Group.

You can buy an AD&D policy by itself, or as an add-on policy, Hunter notes. “Most life insurance companies will allow you to add the endorsement.”

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    Who needs AD&D insurance?

    Kevin Foley, a New Jersey-based insurance agent, says AD&D can be useful for people who work in dangerous occupations, such as heavy equipment operators or electrical power line workers.

    “People who do high-risk physical labor are the people who ought to think about it,” he says. “People who work at desk jobs aren’t at risk for that kind of trauma.”

    Having a supplemental AD&D endorsement on a health or life insurance policy provides an extra layer of financial protection, says Jim Armitage, an insurance agent in Arcadia, Calif. However, buying an AD&D policy without health or life insurance could leave you or your beneficiaries without coverage if you contract an illness that’s expensive to treat or if you die of natural causes.

    Because you’re far more likely to die of natural causes than from the results of an accident, if you buy standalone AD&D coverage there’s a good chance that there will be no payout to your beneficiaries when you die. According to Centers for Disease Control and Prevention data for 2014 — the most recent year available — the leading causes of death in the U.S. are heart disease, followed by cancer and chronic lower reparatory disease. Accidents are the fourth leading cause of death.

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    How much does AD&D insurance cost?

    AD&D policies typically aren’t expensive, says Hunter. “You usually can purchase a policy for $10 or $20 per month,” she says.

    Generally, AD&D insurance policies don’t require a physical examination in order to qualify, she adds. “There is no medical underwriting.”

    The amounts that are paid out for accidental death or dismemberment injuries are spelled out in each policy. It’s important to note that in order to qualify for benefits, your injuries or your death must occur within a set time frame after the date of your accident, typically within three months, Hunter says.

    In addition, you or your beneficiaries can collect only if the loss is a considered to be a result of an accident. The terms of your policy outline what percentage of the policy’s face value will be paid for such things as loss of speech, loss of an eye, or loss of a limb, Hunter adds.

    Are there any AD&D coverage exclusions?

    You should read your AD&D insurance policy carefully to know what to expect if you or your beneficiaries file a claim. For example, if you die while participating in a risky sport, such as skydiving, there may be no payout at all, Hunter notes.

    There are additional exclusions for deaths caused by such things as complications from surgeries, suicide, and death resulting from an overdose of toxic substances. Some policies won’t cover losses for intentional, self-inflicted injuries.

    Your policy will specify the circumstances under which a death is covered. These may include homicide, exposure to the elements, traffic accidents, falls, and drowning.

    Where can you buy an AD&D insurance policy?

    If you decide to buy AD&D insurance, it’s often available from major insurance companies, Hunter says. They also may be available from credit card companies or credit unions, and some workplaces may offer a free or discounted policy as well.