Accidental Death and Dismemberment - AD&D Insurance

Accidental Death and Dismemberment - AD&D Insurance

Accidental Death and Dismemberment (AD&D) Insurance is a limited form of life insurance that pays benefits in case of accidental death or dismemberment of one or more limbs. AD&D insurance is not a replacement for life insurance or disability insurance. However, AD&D insurance can be very helpful if you are traveling for a short time and you need high-limit AD&D insurance.

Accidental Death Insurance Explained

When you buy AD&D insurance, you will purchase a benefit amount called "principal sum". If you die in an accident, the insurance company will pay 100% of the principal sum to your beneficiary - beneficiaries can be your spouse, children, estate, or another person you choose.

The death must be caused solely by an accident and not due to other reasons, such as:

  • Illness or disease
  • Surgery
  • Bungee jumping
  • Car racing
  • War
  • Suicide or attempted suicide
  • Illegal substance overdose
  • Skydiving
  • Drunk driving
  • Non-commercial radiation
  • Natural causes
  • Old age
  • Overdose with toxic or poisonous substances
  • Accident or injury due to the insured's felonious act
  • Riding off-road vehicles
  • Playing collegiate or professional sports

In order to claim benefits under AD&D insurance, the death or injury must be a direct result of an accident and not due to other causes. E.g., while driving a car, if you have a heart attack and that causes an accident which causes death, AD&D insurance would not pay. Commonly covered causes of death that AD&D insurance can cover include:

  • Transportation accidents on land, water and air
  • Heavy equipment accidents
  • Falls
  • Homicide
  • Drowning

Some insurance plans may provide a higher benefit amount if the accident occurs while riding in a fare-paying public transport such as a flight, bus or train.

Conditions for Filing a Claim with AD&D Insurance

In order to claim under AD&D insurance, certain conditions apply:

  • Your insurance coverage must be effective on the day of accident
  • The insurance company requires the proof of accident at the time of filing a claim
  • An autopsy of the deceased may be required
  • Death must occur within a certain duration after the accident. Depending upon the insurance company, it may be from a few weeks to a few months, or up to a year
  • Official investigation of an accident

Additionally, in case a family is insured under the insurance, there may be an aggregate limit that may be paid for the family - family is usually defined as parent(s) and dependent children in most insurances.

Dismemberment Benefit of AD&D Insurance

A dismemberment benefit in AD&D insurance covers the loss of an appendage and is usually defined as the complete severance of a limb or the loss of functions such as speech, eyesight or hearing. The exact details vary by the specific insurance policy. However, typically if you lose one member such as a hand, leg or an eye, you would receive 50% of the principal sum. If you lose two members, such as hands, legs or eyes, your beneficiary would receive 100% of the principal sum.

Some insurance policies may provide a smaller benefit of 25% to 50% of the principal sum for the loss of speech or hearing, coma, paralysis, or loss of the index finger and thumb of the same hand.

Tips for Purchasing AD&D Insurance

When you purchase AD&D insurance, make sure to leave the copy of your insurance policy behind and inform your beneficiary (such as spouse, children or other family members) about it so they can file a claim in case of an unexpected event.

As the possibility of accidental death is relatively low, you can purchase a high amount of coverage for a low cost, especially if the coverage duration is small, as would be the case when you buy the insurance for use while traveling.

Many travel medical insurance plans include some amount of AD&D insurance. However, if you would like a higher amount, you can buy standalone high-limit AD&D insurance. The amount of AD&D insurance is typically limited to 10 times your annual income.

While the AD&D insurance would pay the principal sum as the death or dismemberment benefit, it would typically not pay for funeral or burial costs; however, the beneficiary of the policy could use the funds received to cover those costs.

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