For the vast majority of workers who do not have individual disability insurance, accidental death and dismemberment (AD&D) benefits can provide their families added peace of mind at very little cost—as little as $5 per employee per month.
AD&D insurance pays a set benefit if a covered employee dies in an accident. It also pays a portion of the death benefit if he/she suffers loss of use of an extremity, hearing or sight due to accident. You can provide AD&D benefits either as an addition, or rider, to your group life policy, or you can buy a separate group AD&D policy. You can also offer AD&D as a voluntary benefit.
AD&D also pays a portion of the death benefit if you lose or suffer the loss of use of an extremity, hearing or sight due to accident. This makes AD&D valuable protection for the vast majority of people who do not have individual disability insurance. AD&D insurance can provide their families protection from certain types of disabilities for very little cost.
Unintentional injury ranks as the fifth leading cause of death among all Americans. AD&D policies provide a set payment, typically $100,000, to beneficiaries of people who die from injuries suffered in an accident.
Dismemberment
AD&D coverage doesn’t help just the family of a deceased, however. The “dismemberment” part of the policy’s name comes from the fact the policy also pays a benefit if an insured loses a limb or its use in an accident. The extent of benefits payable depends on the extent of loss. For example, a policy might pay half of the death benefit to the insured for the accidental loss of one hand or arm or one foot or leg. If the insured lost two or more limbs (combination of arms and legs), the policy would pay the entire face value (death benefit) to the insured.
AD&D policies may also cover the sudden loss of vision or hearing. The same principles apply. If an insured loses one eye (or its use), the policy would pay one half the benefit. If he/she loses both eyes, then the insured will receive the entire face value of the policy.
Double Indemnity
You can obtain coverage in a separate AD&D policy, or by simply adding coverage to term life policies you already have in place through an accidental death and dismemberment rider. With an AD&D rider, the insurance company will pay a “double indemnity.” This means if a covered accident caused the insured’s accidental death, the beneficiary would receive the life policy’s death benefit, plus a benefit under the AD&D rider.
AD&D policies do not cover death by any form of illegal or crime-related activities. Policies also don’t cover death by suicide or death by a malfunction of the body. And because they don’t cover death from illness, an AD&D policy is no substitute for life insurance coverage. Nevertheless, AD&D policies provide a valuable benefit for people who use their bodies to earn their livelihood.
