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What is 'Accidental Death And Dismemberment Insurance - AD&D'

Accidental death and dismemberment insurance (AD&D) is a rider attached to a health insurance or life insurance policy covering death by accidental means and dismemberment, including the loss of or the loss of use of body parts or functions (meanings limbs, speech, eyesight or hearing). Because these riders are generally constructed in a way that makes the insurer pay twice the amount otherwise payable, AD&D is sometimes referred to as a double indemnity rider. It is essential for prospective buyers to carefully read the fine print before adding this insurance because it is a strictly limited policy and is often encumbered with a variety of specific terms that must be followed to the letter.

BREAKING DOWN 'Accidental Death And Dismemberment Insurance - AD&D'

There a schedule that lays out in detail what percentages of the total payout the insured for different circumstances, and specialty circumstances may or may not be covered and to varying degrees. For example, if an insured individual is injured in some type of accident but later dies as a result of the accident, the death must occur within a certain period of time.

Accidental Death

When an AD&D rider is added to any life insurance plan, benefits will be paid to the indicated beneficiaries — both the life insurance and AD&D benefits — in the event that the insured dies accidentally; however the benefits typically can only reach a set amount. In this way, the insurance provider puts a cap on the amount it will have to pay out.

Typically, specified circumstances are covered under the accidental death term, including exposure to the elements, traffic accidents, homicide, falls, drowning and accidents with heavy equipment.

Dismemberment

Typically, fractional amounts of the AD&D policy will be paid out for instances of the loss of a body part or the function of certain body parts, such as the loss of sight, hearing or speech or in the case of permanent paralysis. The types of injuries covered and the extent to which those injuries are covered are specific to and spelled out by each insurer and package. It is rare for a policy to pay out 100% anything less than a combination of the loss of a hand, arm, foot or leg and the loss of sight or hearing in one eye or one ear.

Common AD&D Exclusions

Each insurance provider includes a list of circumstances of death and/or dismemberment that are excluded from coverage by the AD&D policy. In most instances, this list includes suicide, death as a result of illness and injuries from war. Other common exclusions include death resulting from the overdose of toxic substances, death while under the influence of nonprescription drugs and the injury or death of a professional athlete during a sporting event.

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