What is an Accidental Death and Dismemberment Benefit?
An accidental death and dismemberment (AD&D) benefit is the payout from either a standalone AD&D policy or an AD&D rider added to a life or health insurance policy. It gives the policy’s beneficiaries a predetermined amount of money in the event of the insured’s accidental death and distributes a sum of money to the insured if they lose a limb or specific bodily functions (like vision).
Getting AD&D benefits
Individuals have options for putting AD&D coverage in place. For starters, they can purchase standalone accidental death or dismemberment policies. But if their life insurance provider offers the option, it’s generally more cost-effective to add an AD&D rider to a life insurance policy.
It’s important to note that AD&D insurance is not a replacement for life insurance. That’s because it only pays out the benefit in very specific situations.
AD&D benefit examples
Life insurance companies get very specific about what counts as accidental death. You can’t die from most medical conditions, for example. A heart attack or death from cancer generally won’t activate an AD&D benefit.
Some examples of things that might be classified as accidental death include:
- Traffic fatalities
- Exposure to the elements
- Industrial accidents
Basically, if something could qualify as a freak accident, the insurance company will probably consider it an accidental death.
Dismemberment includes the loss of a limb, but it extends beyond that. Losing the use of parts of your body — like your ears or eyes — and paralysis can also trigger the insurance company to distribute a portion of the AD&D benefit to you.
How AD&D benefits get paid
If the incident falls within the insurance provider’s categorization of accidental death, the policy beneficiaries get the AD&D benefit distributed to them.
When AD&D is added as a life insurance rider, the AD&D benefit is added to the policy’s death benefit. That means that the beneficiaries will get considerably more money in the event of accidental death because they’ll get both the life insurance policy’s death benefit and the AD&D rider’s benefit.
After dismemberment, the insurance company distributes money to the policy owner. Usually, it’s not the full AD&D benefit, but a portion of it is based on the severity of the dismemberment.