Pros and Cons of Accidental Death And Dismemberment Insurance (AD&D)

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Accidental death and dismemberment insurance offers coverage for a death that happened via an accident. Also known as AD&D insurance, it covers cases where the insured loses a limb or a function such as sight or hearing in an accident. 

It is usually added as a rider to life insurance (or a health insurance policy) and is not an acceptable substitute for a full life insurance policy. Only very few insurance companies offer AD&D insurance as a standalone policy. 

The beneficiaries under this policy will get a lump-sum payment if the policyholder dies in an accident. The policyholder, in the case where the accident got them injured, may get living benefits which are determined by the type of injury. 

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Many employers in the United States offer Accidental death and dismemberment insurance as part of their benefits package to workers, and there are even group plans that allow you to insure your family members. 

What Is Covered?

It is only meant to cover death and injuries sustained from an accident. It won’t provide coverage for death that occurred via a natural cause or illness – including a stroke or heart attack. When the accident happens, the person doesn’t have to die instantly, but there may be a particular time frame between when the incident occurred and when they eventually died. 

Also, if a policyholder dies from an accident while on public transportation (whether it’s by road, air, etc), the payout can be more than twice the amount of their base coverage.

Also Read:  What Director's and Officers' (D&O) Insurance Cover And What It Doesn’t

What it doesn’t cover?

When it comes to what is not covered by AD&D insurance, it can vary from one insurance firm to another, as various factors influence this, such as the state where you live. However, on a general note, benefits are not payable for incidents such as:

  • Suicide or self-inflicted injuries
  • An injury that occurred before coverage
  • Death caused by illnesses
  • Death or injury while driving under the influence of alcohol
  • Death or injury while committing a crime
  • Death or injury while participating in a riot

Advantages

No Medical Exam

You are not mandated to take a medical exam before you can get Accidental death and dismemberment insurance. You can take advantage of this plan if you can’t get affordable life insurance as a result of some pre-existing conditions.

No Denial On Health Issues

Under this coverage, you won’t be denied coverage when trying to purchase a policy, just because of your health, as long as you meet the age requirements.

Getting Coverage Is Fast

Since you won’t have to battle with questionnaires and medical exams that will require a waiting period, it is both easy and quick to get. A person can get approved for a policy just a few hours after applying. 

Cons Of AD&D Insurance 

Coverage Is Limited

While the whole idea behind this coverage is reasonable, its greatest disadvantages revolve around its limitations. It only takes of payout if the death or injury was a result of an accident, nothing more.

Low Payout 

While the policy is usually cheaper than traditional life insurance, the payout is typically low.

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Losing Your Coverage When You Leave Your Job

An AD&D policy is not as popular as other policy products. The implication of this is that the majority of those who have a policy got it via a group plan at their workplace. This means that when you the company, you will most likely lose the coverage too.

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