Accidental Death and Dismemberment Insurance (AD&D)

Accidental death and dismemberment insurance is a type of coverage that is designed to cover individuals against accidents. This type of coverage is different from traditional life insurance although it offers some of the same benefits. Here are the basics of accidental death and dismemberment insurance and how it works.

Accidental Death and Dismemberment Insurance

This is a type of insurance policy that is purchased in order to protect an individual against dying from an accident or being dismembered in an accident. This type of policy is only going to pay if you die as the result of an accident or if you are dismembered during an accident. 

With traditional life insurance, it does not matter how you die as long as it is not self-inflicted. As long as you pass away, your family is going to be able to receive some type of benefit. With this type of policy, this is not going to be the case. You have to die from a covered accident in order to trigger the payout.

This type of policy will also pay if you are dismembered in some capacity. For example, if an accident causes you to lose your sight or your hearing, the insurance policy will pay you a certain amount of money. Another common example is if you lose a limb during an accident. 

Policy or Rider

This type of insurance coverage can be purchased through a specific policy. In addition to that, you can also get this type of coverage through a rider on another insurance policy. Therefore, if you want this type of coverage, you will need to decide which type of option you are going to choose. 

Limited Coverage

Many individuals do not believe that it is worth it to invest in this type of insurance coverage. This type of insurance coverage is extremely limited in scope and does not provide a great deal of value. A very small percentage of deaths occur from accidents. A much higher percentage of deaths come from natural causes such as heart disease or cancer. Because of this, individuals are much more likely to die from something else besides an accident. With such a limited chance of dying from an accident, most individuals are better served by purchasing a comprehensive life insurance policy. This way, it does not matter how you die, your family is going to be taken care of.

Double Indemnity

Even though it may not be practical to purchase an individual policy for accidental death and dismemberment insurance, it might make some sense to purchase a rider. By doing this, you are essentially going to be able to double the insurance payout if you die from an accident. For example, if you have a $200,000 life insurance policy and you die from an accident, your family may be able to receive $400,000. This is known as double indemnity because it doubles the payout that is received if the death is caused by an accident.

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