You’ve probably heard of life insurance at one point or another, but accidental death & dismemberment coverage comes up a lot less in conversation. Often referred to by its abbreviation (AD&D) this policy works differently than a traditional term or whole life plan. Still, it proves useful for many situations. For all of you still wondering what’s up with the name, we’ll get into some of the details on this coverage now.
AD&D stands for…
Accident death and dismemberment because that’s exactly what’s covered by this policy. Unlike a general life insurance plan, this type of policy doesn’t cover all causes of death. Sudden illnesses and chronic conditions are specifically excluded from AD&D. In fact, it really only activates if something happens as a result of an accident. Engaging in illegal activity, though, could potentially void the benefits of AD&D. For example, if you pass away from behavior associated with driving under the influence (where you’re the one drinking and driving), then your beneficiaries would not receive anything. The same applies for drug overdoses and all forms of suicide. However, if you’re severely injured from a car accident, plane crash, or even a workplace incident, then you have multiple options for coverage.
The other D…
Although dismemberment isn’t a term we like to throw around, it’s one we need to touch on today. Basically, this means that if you have some other type of loss as the result of an accident (other than death), you could still use this type of policy. For serious injuries that cause you to lose a limb, your speech, your sight, etc. you could receive a substantial portion of the total benefits. The exact amount will vary depending on your policy provisions, but it’s generally about half. Therefore, if you have a $50,000 policy and become deaf as the result of an accident, then you could receive $25,000. This could go toward treatment or provide for additional income. It’s really up to you how you want to use it. While it’s an option we hope you don’t need to exercise, it’s an important piece of insurance, especially if you work in a dangerous profession.
As additional coverage…
While we usually don’t recommend AD&D as a standalone plan, it is possible to purchase this policy without having regular life insurance. More commonly, though, it’s sold as a rider to a term life plan or purchased for a nominal fee through an employer. We just want everyone to know that accidental death and dismemberment isn’t really a replacement for life insurance. If you take nothing else away from this entry, remember that the two policies cover very different situations. Because AD&D is more limited in terms of benefits, it’s also typically much less expensive. Depending on your lifestyle and budget, the additional coverage could be worth the slight increase in price.
It’s also an option for individuals who would normally have a hard time applying for traditional life insurance. Since AD&D doesn’t cover illnesses at all, most applications don’t ask a lot of questions about your health history. Therefore, pretty much anyone can get this type of coverage. If you have additional questions or would like a personalized quote for this policy, please contact Freedom Insurance Agency today!
