Is Accidental Death And Dismemberment Worth It–AD&D Insurance

| January 7, 2013 | 0 Comments
Short Answer: First and foremost, accidental death Accidental Death And Dismembermentand dismemberment insurance plan is NOT a necessity. If your employer provides this benefit without any cost attached then snap it. Accidental death is a silent epidemic in America. Chances of an individual dying from health issues are far more than dying in an accident but you cannot predict accidents in life. No matter how hard we try to avoid them or take precaution. Looking at the alarming rise in car accidents in the US (almost 20% over a period of 10 years), one form of insurance coverage has been creating a lot of buzz called accidental death and dismemberment plan. Also knows as ad&d insurance. The main advantage of ad&d insurance is to provide added supplemental coverage at very low price. So, what is ad&d insurance plan?

 

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

  1. 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.
  2. 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.

Image Courtesy: tuxstorm

 

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