Accidental death and dismemberment insurance

In insurance, accidental death and dismemberment (AD&D) is a policy that pays benefits to the beneficiary if the cause of death is an accident. This is a limited form of life insurance which is generally less expensive.

Accidental death

In the event of an accidental death, this insurance will pay benefits in addition to any life insurance but only up to a set amount total regardless of any other insurance held by same insurer, held by the client. This is called double indemnity coverage and is often available even when accidental death insurance is merely an add-on to a regular life insurance plan. Some of the covered accidents include traffic accidents, exposure, homicide, falls, heavy equipment accidents and drowning. Accidental deaths are the fifth leading cause of death in the U.S.^[1] as well as in Canada.

Accidental death insurance is not an investment vehicle and thus clients are paying only for sustained protection. Most policies have to be renewed periodically (with revised terms), although the client's consent with renewal is often implicitly assumed.

Common exclusions

Every insurer maintains a list of events and circumstances that void the insured's entitlement to his or her accidental death benefit. Death by illness, suicide, non-commercial radiation, war injury, and natural causes are generally not covered by AD&D. Similarly, death while under the influence of any non-prescribed drugs or alcohol is most likely exempt from coverage. Overdose with toxic or poisonous substances and injury of an athlete during a professional sporting event may void the right to claim too.

Some insurance carriers will tailor their clients' coverage to include some of the above risks, but every such extension will be accompanied by increased premiums.

Due to these restrictions, the process of claiming the benefit may be relatively lengthy; the deceased client may have to undergo autopsy and the accident may have to be officially investigated before a claim is approved by the insurer.

Dismemberment

Fractional amounts of the policy will be paid out if the covered employee loses a bodily appendage or sight because of an accident.^[2][3][4] Additionally, AD&D generally pays benefits for the loss of limbs, fingers, toes, sight and permanent paralysis. The types of injuries covered and the amount paid vary by insurer and package, and are explicitly enumerated in the insurance policy.

Coverage types

There are four common types of group AD&D plans offered in the United States:

1. Group Life Supplement – the AD&D benefit is included as part of a group life insurance contract, and the benefit amount is usually the same as that of the group life benefit;
2. Voluntary – the AD&D is offered to members of a group as a separate, elective benefit, and premiums are generally paid as a payroll deduction;
3. Travel Accident (Business Trip) – the AD&D benefit is provided through an employee benefit plan and provides supplemental accident protection to workers while they are traveling on company business (the entire premium is usually paid by the employer);
4. Dependents – Some group AD&D plans also provide coverage for dependents.^[5]

History

In 1884, the German Reichstag allowed a bill for an accidental death and dismemberment insurance (Unfallversicherung).

See also

• Bureau of Labor Statistics
• Life insurance
• Term life insurance
• Permanent life insurance
• Health insurance
• Health care

References