The CDC reports that accidents are in the top three leading causes of death in the United States. It’s safe to assume that nobody wants to think about serious injury or death, especially with regards to themselves or a loved one. However, you never know when tragedy will strike, especially in today’s unpredictable world. When you invest in a health or life insurance policy, you’re allowing yourself to have peace of mind in the event of anything unexpected. Accidental Death and Dismemberment insurance is supplemental insurance added as a rider that can elevate that peace of mind, protecting and providing for you and your loved one if a tragic event occurs.
Overview
When you’re investing in something as serious as life insurance, you want to be certain of what you’re getting, so you don’t run into any setbacks down the line. When you add something like AD&D to your existing health or life insurance, you must understand the components of the coverage. An AD&D rider allows you to name beneficiaries to receive benefits for anything covered under the policy terms. Also known as a “double indemnity” rider, AD&D insurance covers certain events leading to accidental death or dismemberment.
Accidental Death
If you’re thinking about adding an AD&D rider to your current health or life insurance policy, you’ll want to make sure you understand exactly what falls under the policy. If an insured person dies accidentally, then the named beneficiaries are entitled to benefits that will not exceed an amount laid out in the policy terms.
To qualify under accidental death, the insured person must experience one of the following:
- Homicide
- Fatal falls
- Drowning
- Heavy equipment accidents
- Exposure to the elements
- Traffic accidents
Typically, the payout to beneficiaries under accidental death is twice the face value of the policy.
Dismemberment
Sometimes a tragic event can occur and leave someone with permanent bodily injury. Even though the insured person didn’t die, they will still face significant hardship throughout the rest of their life as a result of this covered event.
- Loss of a limb
- Partial or permanent paralysis
- Loss of use of specific body parts
- Blindness
- Deafness
- Speech impairment
When something falls under the dismemberment clause of a life insurance policy, the insured person will receive a partial payout from their life insurance policy.
What isn’t included?
When you’re dealing with something as sensitive as life and death, you want to make sure you understand exactly what you’re preparing for financially. If you assume something that doesn’t qualify is covered and then pass away, your beneficiaries might not get anything that was intended for them.
No matter the insurance company you choose, each one should provide you with a list of what isn’t included. Some of these circumstances include but are not limited to death caused by:
- Suicide
- Short or long-term illness
- Natural causes
- Wartime injuries
- Overdosing from toxic substances (including drugs and alcohol)
- Sporting events involving professional athletes
Under extreme circumstances, insurance companies can choose to make exceptions. For example, terrorist attacks usually fall under the “wartime” category. However, the families of 9/11 victims were still able to benefit from life insurance payouts.
The only way to be prepared is to know exactly where your coverage ends. This way, you’ll be able to investigate other supplemental options if you still need additional coverage.
Pros and Cons of AD&D Insurance
The most obvious advantage of AD&D insurance is the double indemnity clause. Appropriately named, this allows the beneficiary to receive double the face value of the policy. This is intended to help prepare for any loss that continues as a result of the insured’s death. If you think about a standard family of four, with a working husband and a stay-at-home mother, this kind of payout could save a family’s financial future. If something were to happen to the husband, the wife would become a single mother and sole provider in one fall swoop. If you aren’t prepared with life insurance policies but live in a dynamic where one party supports another, you’ll want to take advantage of AD&D insurance.
Depending on your insurance company, you might be able to reap extra benefits. Some policies will offer counseling services for grieving spouses, while others provide funding for the higher education of surviving children. If you haven’t settled on a specific insurance company yet, make sure to inquire about any additional benefits that might be available through their AD&D rider.
Although there is a lot to gain from AD&D insurance, it should never be thought of as a catch-all type of coverage. Sometimes you might think an event is going to be covered, only to find out it qualifies under a different category that falls outside of AD&D. Once you pay your premiums, they will not be paid back unless you suffer an event explicitly included in the rider. Even though accidents are a leading cause of death in the United States, people suffer death from heart disease and cancer more often. Since heart disease is considered a natural cause, and cancer an illness, there would be no death benefit paid.
When it comes to the pros and cons of AD&D policies, it all comes down to perspective and what means more to you. If you have a family that depends on you for survival, then this rider is probably something you should not go another day without. On the flip side, if you’ve been struggling with chronic illness, or depend primarily on someone else for financial security, you might not benefit from having such a rider added to your life insurance.
Is AD&D insurance expensive?
Compared to other supplemental insurance, AD&D itself doesn’t usually cost too much. Your standard life insurance policy is what you’ll be paying the most into. Since AD&D covers events that are usually considered highly unlikely, the monthly cost is relatively low in comparison to riders for insured events that are more common. If your life insurance policy is sponsored by an employer, you may not even notice the extra cost coming out with your payroll deductions. If you are responsible for your insurance, you’ll notice an increase, but nothing quite like adding another type of rider or supplemental insurance.
Conclusion
A lot of people don’t like talking about uncomfortable topics like death or tragedy. It can be difficult to find the right time to bring it up, but you’ll be relieved when you do. Life, accident, and health insurance are arguably the most important forms of insurance you can invest in. All types of insurance are intended to protect you in one way or another, but an AD&D rider will give you peace of mind that you can’t get from anything else. Even if something completely unforeseen and tragic does occur, your loved ones will always be taken care of, and any recovery expenses you might need will be significantly reduced or taken care of entirely.
If you have an existing life or health insurance policy, simply contact your agent to discuss what an AD&D rider would look like. For those who don’t have any life or health insurance, this is something you can get right off the bat when you invest in a new policy.