Accidental Death and Dismemberment Insurance (AD&D)

Accidental Death and Dismemberment Insurance (AD&D)

Meaning of Accidental Death and Dismemberment Insurance

The Accidental Death and Dismemberment insurance, abbreviated as AD&D, can be likened to a life insurance policy that covers the unintentional death or dismemberment of body parts (like the limbs, loss of vision or audio) of an AD&D insurance policyholder.

The AD&D insurance contract contains some terms and conditions under which either death or dismemberment of body parts must occur before the benefits can be paid out. When AD&D insurance is added to a life insurance policy, the next of kin of the policyholder gets the benefits when the policyholder dies accidentally. Accidental deaths cover cases of drowning, industrial accidents or homicides. In a case of death of the policyholder, his/her beneficiary will be entitled to two times the face value of the amount contained in the life insurance policy, thus providing them with cash when tragedy occurs.

In a situation where an AD&D holder losses a specific part of his body, like the limbs, vision, audio or speech, the insurance company does not pay out the entire benefit, rather a certain percentage of the total money contained in the policy is paid out.

Often, it is advisable for individuals who work in highly hazardous industries to have an AD&D insurance policy.

When the AD&D Insurance does not pay claims

Insurance covering AD&D will only pay out claims if death occurs within a specific time. However, there are times the AD&D insurance will not pay out claims to beneficiaries. This happens when death or dismemberment occurs through:

 Car racing

2.       Surgery

3.       Skiing or skating

4.       Skydiving

5.       Suicide and attempted suicide

6.       Drug overdose and many more.

Why the AD&D Insurance is Inexpensive

AD&D insurance has a low cost because there are usually not many claims, and because the AD&D insurance poses a low risk to insurance companies. Due to these reasons, the AD&D insurance rarely pays out.

The AD&D insurance has as low patronage because many policyholders prefer to buy life insurance policies so that their beneficiaries will not suffer in the event of death. There are arguments that the A&D insurance is not a suitable replacement for the life insurance coverage, however, it is regarded as the second to life insurance coverage.

Purchasing the AD&D Insurance coverage

The AD&D insurance coverage can be purchased as a separate entity or as a form of endorsement on life or other insurance policies. The AD&D policy can also be part of options that are usually listed in a health insurance plan. Payment for AD&D packages can be made using credit cards.

Advantages of the AD&D insurance

1.       The AD&D insurance can cost as low as $60 annually, however depending on the amount of coverage purchased.

2.       The AD&D insurance can provide some form of protection in the case of death or a dismemberment of body parts.

Limitation of the AD&D contract

The plan does not provide much benefits due to its low cost.