Accidental death and dismemberment insurance is primarily offered as a rider on either your life insurance or disability health insurance plan. To explain the coverage offered under the ad&d plan, i will break down the term into “accidental death” and “dismemberment”.
Accidental Death Benefit: –> Ad&d insurance plan will cover you in case of accidental death and pay 100% benefit to your beneficiaries over and above of any life insurance policies which you may have. Even if it is from the same insurer.
Dismemberment Benefit: This part of the ad&d plan will cover your in case of dismemberment of any body parts including eyesight from an accident.
The Inner Findings Of Accidental Death And
Dismemberment Insurance Plan
- Ad&d insurance plan is NOT a substitute for a life insurance policy
- It is more of a supplemental insurance plan to widen the scope of coverage and double your benefits at very low cost. Hence, quite often it is also known as double indemnity plan.
- Ad&d insurance is a very low risk option for the insurer as your chances of dying in an accident are not as high. As a result these policies are offered at a low cost.
- If your job demands dangerous and hazardous daily activities or if you are a young driver then such an insurance plan might be a good fit for you.
- Ad&d insurance coverage is not a necessity. If you have adequate life and health insurance then you surely can live without it.
- To receive 100% benefit the cause has to be accidental death only.
- Moreover, in case of dismemberment benefits, if there is a loss of only one limb or one eye, the payout is fractional (50% or more) depending on the severity of the injury occurred.
- Basic coverage provided by accidental and dismemberment insurance rider could be as follows:1) Accidental Death: Benefit Amount is 100%
2) Dismemberment(Loss) of 1 hand: 50% benefit
3) Dismemberment(Loss) of 1 foot: 50% benefit
4) Dismemberment(Loss) of sight in 1 eye: 50% benefit
5) Dismemberment of thumb and index finger in the same hand: 25% benefit
- There are various ways through which you can obtain accidental death and dismemberment insurance. Some of the options are mentioned below:A) Through your employer’s group plan.
B) Available as a rider on life insurance plans
C) Individual options include through banks, add on your credit card and mortgage lenders.
- Generally individuals purchasing life insurance miss the right amount of coverage which should suffice their needs and hence remain under insured. Ad&d insurance rider can be a good way to add another extra layer of coverage at a cheap rate.
- Some insurance providers may offer beneficiary counseling services, traveling assistance services and ID theft protection services to gain some advantage over their competitors.
THE BIG QUESTION – AD&D INSURANCE or LIFE INSURANCE?
Although the additional value which ad&d insurance plan adds at a very low cost cannot be neglected but it cannot be substituted for life insurance. If you need life insurance then buying a basic term life insurance policy might be the best option. Do not get lured by statistically driven insurance sales pitch where you are betting your life on a few bucks.
CASE STUDY SCENARIO: AD&D INSURANCE
- Assuming an individual has $500,000 of accidental death policy. While driving back home from work you have a heart attack and the person bangs his vehicle onto the cars coming from other side. Resulting in death. Will you get paid ? NO. Although you died in an accident, the primary cause of death is was heart attack.
- Suppose an individual meets with an accident and sustain life threatening head injuries. The person dies after 6 months. Will his beneficiaries receive 100% benefit? Again, i will disappoint you, NO. As there is a clause in ad&d plans which states that the benefit will only be paid if the death occurs within specified time frame from the date of accident.
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Category: Life Insurance