What To Know About AD&D Insurance

Accidents are the third cause of death in the United States, right after cancer and heart disease. In fact, they're the No. 1 cause of death for adults aged 25 to 44, according to the Centers for Disease Control. So, it's understandable that you would wish to insure against accidental deaths.

That's why there is accidental death and dismemberment (AD&D) insurance coverage. But like all insurance plans, it helps to understand the fine print and costs, as well as if you think you should buy it.

What is Accidental Death and Dismemberment Insurance?

Accidental death and dismemberment insurance generally covers accidental death as well as loss of a limb or function, like sight, hearing, or speech, as part of a fatal accident.

Beneficiaries that you specify on your policy will typically receive a lump-sum payment if you are injured in an accident. You can receive what are called living benefits if you are injured and the amount of the payment is often influenced by the kind of injury.

For example, on a loss of a hand, foot, or sight in one eye, you would receive 50 percent of the premium amount, while on the loss of two or more items, you would receive 100 percent. And on paralysis due to an accident, you would receive 50 percent of the benefit amount.

The amount of coverage you can get will rely on your selection of insurance provider or employer that offers AD&D insurance as an employee perk. For example, you can purchase an AD&D policy from Farmers Insurance with a coverage amount exceeding $37,500 to $200,000.

What insurance is covered by AD&D?

The AD&D coverage will only pay for death, injuries and accidents not caused by illness or natural causes or accidents at work, home or while traveling. Policies usually cover death or injuries from accidents.

If you die as a result of an accident while traveling in public-transportation services, such as a bus, train or plane, a partial or full reimbursement is provided based on your policy. Unless the accident is instant, it is usually limited to within a certain period of time, such as within a few months.

Are there other AD&D insurance benefits?

Some insurers will reward you with an added benefit if you were using a seatbelt in the event of an accident that caused you personal injury. Additional benefits might also be supplied to help kids cover education expenses. Counseling, legal, and financial advisory services for beneficiaries may also be added benefits for bereaved spouses. Insurers will offer these services differently.

What is not covered by AD&D insurance?

Policies often have a long list of circumstances where death or injuries would not be covered. Those exceptions vary based on the business issuing the policy as well as the state of issuance. The following is a sample of exceptions seen in the state of Kansas from an online disability insurance company, Fabric. Many of these are typical of AD&D policies.

• Benefits are not paid for:
• Injury before coverage as a result of illness, including mental illness. 
• Suicide or self-inflicted injuries. 
• Drug overdose. 
• Death or injury while driving under the influence of alcohol. Death or injury from voluntarily inhaling gas or taking poison. Death or injury while committing a crime.
• Injury or loss of life while participating in a disturbance or contracted during a conflict. Injuries while serving as a military member. Death or loss of life due to a car accident, flying an airplane, playing professional sports, or taking part in extreme sports such as skydiving and scuba diving.

How can you get AD&D insurance?

If you work for a company, you lik ely receive the company's AD&D insurance benefit. According to the Society for Human Resource Management's 2019 survey of companies, 83% of the companies that responded stated that they offered this insurance to their employees in 2019. AD&D insurance is an often offered workplace benefit among companies interviewed for the survey.

Some companies, such as AIG Direct, Farmers Insurance, and Mutual of Omaha, sell individual AD&D insurance packages. Online companies such as Fabric allow users to procure accidental death insurance on the Internet within just a few clicks. You may also consult an insurance policy agent so they can evaluate your options and locate the ideal life insurance option for you.

Accidental death coverage may also be sold as a rider or an add-on to life insurance policies. The coverage may double what your life insurance payout would be in the event of an accident.

How Much Does It Cost?

AD&D insurance is generally less expensive than traditional life insurance because coverage is limited to accidents. If you have a company that offers AD&D insurance, you might be able to get a basic amount as a free perk.

When you purchase AD&D insurance, you typically pay a premium based on the amount of coverage you purchase. In Example, premiums might start at $4.50 for every $100,000 in accidental death coverage from Farmers. Rates start at $6 per month for $100,000 of coverage from Fabric and rise to $30 per month for $500,000 of coverage. Because of insurance from insurer to insurer, you may want to be thorough before settling on a plan.

Pros and Cons of AD&D Insurance

Some people erroneously think that having AD&D insurance is a safety net in the event of an accident. It provides them with a false sense of security, Voegele points out. While AD&D coverage is limited, it's not right for everyone.

Pros

• You don’t have to take a medical exam You do not have to answer questions about your health status, which can make this type of insurance coverage especially attractive to individuals with pre-existing conditions that make it difficult to secure life insurance.
• You won't be denied coverage because of your health. All you have to do is meet the age requirements. Typically, you must be between the age of 18 and 70 or 80.
• You can get money-saving coverage quickly. There are many simple questionnaires, no medical exams and no wait times that you must have your policy approved quickly.

Cons

• Coverage is limited. AD&D will only compensate you if your injury was due to a mishap and you have reported it as an accident. This limited coverage is a big drawback.
• Coverage isn’t as cheap as it seems. A life insurance policy costs less than an AD&D policy, but that s because the payout is so much lower. Because the payout is so unlikely, it's very expensive for an AD&D payout, explains Voegele.
• You might lose your coverage if you leave your job. Some people who have AD/HD insurance do so by getting it through a legacy plan at their job, according to Voegele. Sometimes, you won't be able to maintain that coverage if you leave your job.

Who Should Get AD&D Insurance?

AD&D insurance is not intended to go on forever since payments for coverage are only made in rare scenarios. However, there are some scenarios where it may still be a viable option.

• If it's provided for free, take it, Voegele says.  If you feel strongly you have to pay for it, I would tell you it's highly subjective.  In other words, take into account the value of a particular policy to you personally.
• If you cannot pay for it, the most expensive cause of death for younger people is known as an accident. If you will be able to afford it, it's still in good hands.

Better Options

A term life insurance policy is better than AD&D insurance when compared to providing an unlimited payout for any cause of death (except suicide, generally within the first two years of having the policy). So as a result, accidental injuries and auto accidents, as well as heart attacks and strokes, are typically covered under a traditional term life policy.

You may not be elderly or disabled, but you could have the ability to get term life insurance at a rate that is not much more than what you would pay for AD&D insurance, Kade says.

Disability insurance is able to help finance your salary when you might not be able to work due to illness or injury.