What is AD&D insurance?
The sudden loss of a key family member or a sudden accident that leaves a family breadwinner unable to work can leave a family financially vulnerable. AD&D insurance, as its name suggests, can provide much needed assistance in the event of an accidental death or injury.
AD&D differs from life insurance in that it covers a smaller range of situations. As a result, it comes with a smaller price tag and can be a good fit when budget is a major consideration. For more comprehensive coverage, AD&D can be combined with a life insurance policy. If there’s a fatal accident, your beneficiaries can claim both life insurance and AD&D, if both policies cover the cause of death.
AD&D is usually offered through an employer.
Many companies carry AD&D as part of their employment benefit packages. Some higher risk industries are even required to offer it. It’s rare to find an AD&D policy that you can purchase individually.
How does AD&D insurance work?
Because AD&D insurance policies are tailored to a narrow and specific set of circumstances, it’s important to take a couple of things into consideration when deciding:
Make sure AD&D insurance benefits cover your risks.
If you’re exposed to a high risk of injury at work (for example, if you operate heavy machinery or handle dangerous chemicals), having AD&D insurance can be a smart way to protect your family. In the event of an accident, it can replace some of your income while you recover and, if necessary, while you retrain for another line of work. On the other hand, if you’re not exposed to excessive risk, a life insurance policy may be sufficient. (You can even supplement it with disability insurance for added protection.)
Decide how to get AD&D insurance protection.
You can buy AD&D insurance in different ways. It can be purchased as a rider, or addition, to a new or existing life insurance policy. Purchasing a rider on a policy is cheaper than purchasing two separate policies. Some employers offer AD&D insurance as part of their benefits packages. Purchases through an employer are referred to as voluntary insurance. The downside of an employer-provided plan is the possibility of losing coverage if you switch jobs.
What does AD&D insurance cover?
AD&D coverage differs from company to company. Insurers agree that an accident is a sudden, unexpected event over which you have no control. However, each policy is specific about what is or is not included in that definition. Medical events like heart attacks and strokes, which tend to occur suddenly and unexpectedly, are considered natural causes and are typically not covered. When it comes to risky activities like sky diving, a resulting death or injury is often not covered. Understanding the details of your policy is key.
Injuries covered by AD&D include loss of limbs or loss of their use. Blindless, deafness, and paralysis are also covered. The benefit payout may be adjusted depending on the severity of the injury. For example, loss of one leg may result in a 50% payout as opposed to the loss of both at a 100% payout. If you have an existing AD&D policy and want information or would like to discuss your options, consulting with a financial professional is the best way to ensure that you pick the best coverage to suit your needs.
Accidental Death and Dismemberment Insurance FAQs.