Life Insurance

Life Insurance

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Accidental Death and Dismemberment Insurance

Accidental Death and Dismemberment Insurance (AD&D), it sounds simple enough, right? But is it really necessary? That's the decision you need to make.

Generally, AD&D insurance is a rider on a basic life or health insurance policy. It's name states exactly what it covers; accidental death and dismemberment insurance, but there are limitations of the coverage. These limitations may be a deciding factor for many on whether or not to add it to their existing life or health insurance policy.

The first thing to consider is whether or not AD&D insurance is a good deal for you. What is the likelihood you will have to make a claim? If you have health and life insurance already, you should be covered in the event something happens to you and you are forced to make a claim. Also, it may be wiser and more cost-effective to just put the money you'd be paying towards the premium into a standard life insurance policy or other form of insurance. Dave Roush, CEO of Insurance.com, warns consumers that "AD&D is a very, very limited form of insurance. When it comes to insurance, you want to be covered and protected in all instances, not just certain ones."

What does AD&D cover?
In the event of a fatal accident or an accident that results in you losing your eyesight or a limb, AD&D will pay out. However, there are stipulations to the coverage. To receive benefits in the event of an accident, your injuries or death must occur within a time frame of three months from the accident date. Only if your death or injuries can be proved as being a direct result of the accident, will you be able to collect off your AD&D coverage.

If you are in surgery and die, have a mental or physical illness, bacterial infection, hernia, or you have a drug overdose that results in your death, you will not be covered by AD&D. "It is important to read the fine print when applying for this kind of policy, because it may just seem like you are getting better and more adequate coverage, when in reality, you're really not," reports Roush.

Dismemberment coverage gets a little trickier. If you lose one member (a hand, foot, limb, or sight in one eye), the insurance company will pay 50 percent of the full benefit. If you lose two members, you will receive the whole benefit.

Where to get AD&D
AD&D policies are generally underwritten by major insurers and can be purchased through credit card offers or credit unions. Some major life or health insurance companies may include AD&D in their group health or life insurance plans. Again, there are limitations for some companies in that the insured must earn at least 10 percent of the principal amount, and in the event of a covered accident, they can collect no more than 10 times their annual salary.

How much is accident protection worth to you?
Accidental death and dismemberment insurance is a good supplement to a life insurance policy. Depending on the amount of coverage needed, AD&D insurance premiums average out at around $60 per year. Even with the low cost of Accidental death and dismemberment, many would prefer to use the money they could be paying for the policy and put it towards more health or life insurance coverage. Also, if your job isn't high-risk, like construction work for instance, buying AD&D doesn't seem to make a lot of sense.

An accidental death policy (minus dismemberment coverage) is another route consumers can go down if they are considering extra coverage. If, for example, you had a $100,000 life insurance policy and you added an accidental death rider, and you were killed in an accident, your beneficiary would get $100,000 from your life insurance and $100,000 from you accidental death insurance. If you're killed on a "public conveyance," the accidental death benefit doubles, so your beneficiary would receive $200,000.

Do you really need it?
Risky or extreme hobbies, such as skydiving, bungee jumping, or extreme sports may not be covered by AD&D, because you are routinely engaging in dangerous activities. If you're working in a high-risk job, such as construction, the AD&D policy may be a good idea-though with high-risk jobs come higher premiums regardless. It is inexpensive accident coverage, and it won't hurt to have the extra coverage, but realize you could be putting the money towards a different kind of insurance policy that is more conducive and beneficial to your lifestyle.

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