When shoring up your financial security, various types of insurance come to mind. For one, health insurance helps pay the bills for doctor’s appointments, medical treatments and surgeries, limiting your out-of-pocket financial responsibilities when you or other family members need care. Pet insurance does the same for veterinary expenses related to your dog, cat or other furry friend. And life insurance provides a financial safety net for your family when you’re gone.
Accidental Death and Dismemberment (AD&D) is another type of insurance that provides an additional layer of financial support if you are in a serious accident that causes your death or certain types of permanent injury.
What Is AD&D Insurance?
AD&D insurance pays out all or part of its cash benefit, i.e., the value of your policy, in two cases:
- If you die as a result of an accident, AD&D pays the full benefit.
- If an accident causes you to lose a limb or vital function, such as the loss of movement (paraplegia and quadriplegia), sight, speech or hearing, AD&D pays all or part of the cash benefit as outlined in your specific policy.
What Type of Accidents Are Covered by AD&D Insurance?
In general, whether the accident occurs at home, work or while traveling, an AD&D policy will cover you if the accident is related to the following circumstances:
- Exposure to the elements
- Traffic accidents
- Use of heavy equipment
It’s important to understand exactly what type of accident is covered when acquiring a specific AD&D policy so that you don’t experience an unexpected surprise if you or a family member files a claim on your behalf.
What Events Are Excluded from AD&D Insurance?
As with all insurance coverage, there are exclusions to AD&D policies. In most instances, the following types of events or situations are not covered:
- Death by suicide
- Death from natural causes, such as old age or a heart attack, except generally if the accident caused the fatal attack
- Death or dismemberment related to any of the following:
- Criminal act by the insured
- Chronic or acute diseases or infections
- Driving or being under the influence of alcohol or non-prescription drugs
- High-risk activities as defined in the policy, such as car racing or skydiving
- Mental health issues
- Overdosing on a toxic substance
- Surgery (during or after)
- War or terrorist attacks
- Participating in your sport if you’re a professional athlete
In addition, this type of insurance typically won’t pay a benefit if the death occurs beyond a certain period after the accident as defined in the policy. However, some AD&D policies allow you to choose additional coverage beyond the basics that will pay a hospital benefit up to a year after the accident if you are admitted for treatment for more than a few consecutive days as a direct result of your injuries.
Who Benefits from an AD&D Policy?
Considering that each year accidents are consistently the third leading cause of death in the United States per the Centers for Disease Control and Prevention (CDC), an AD&D insurance policy is worth a look for just about everyone. However, if you fall into any of these categories, it’s even more so:
- Family’s primary breadwinner: AD&D insurance helps make up for the breadwinner’s lost income as a result of an accident, easing the family’s financial strain.
- Higher-risk profession: If you routinely operate heavy machinery or make your living driving a truck or car, you’re at greater risk of having an accident.
- Rural address: The CDC says that the 15% of Americans who live in rural areas are at more risk of dying from any of the leading causes of death, including accidents, than those in urban areas.
- Younger adults: Generally speaking, older adults are more likely to be affected by fatal illnesses, whereas their younger counterparts tend to be at greater risk of accidents due to their false sense of invincibility and immortality.
- Desire more insurance coverage: AD&D insurance is not life insurance or a substitute for it, but it can provide additional cash benefits if a death occurs as a result of a policy-defined accident.
Where Can You Get AD&D Insurance?
If you think AD&D insurance makes good financial sense for you, there are several ways to get it:
- As a benefit of your credit union membership: Some credit unions, including Quorum, offer their members no-cost AD&D insurance through trusted partnerships.
- As a benefit of your employment: Many employers offer low-cost AD&D insurance as part of their benefits package.
- As a rider to your life insurance policy: You can buy an add-on to your existing policy, known as a rider, that specifically provides AD&D coverage.
- As a standalone policy: Most insurance companies offer AD&D policies.
As with all insurance types, make sure you understand exactly how the policy works and specifically what is covered and excluded before you add it to your financial portfolio.