Loading the player...

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.

RELATED TERMS
  1. Accidental Death Benefit

    The accidental death benefit is payment due to the beneficiary ...
  2. Voluntary Accidental Death And ...

    A financial protection plan that provides a beneficiary with ...
  3. Accidental Means

    A condition for losses covered under an insurance policy that ...
  4. Level Death Benefit

    A life insurance payout that is the same whether the insured ...
  5. Acceleration Life Insurance

    A type of policy that pays a portion (typically 25\% or 50\%) ...
  6. Guaranteed Issue Life Insurance ...

    A type of financial-protection policy that provides cash to a ...
Related Articles
  1. Insurance

    Accidental Death And Dismemberment Insurance

    Accidental death and dismemberment insurance provides coverage if the policyholder dies by accidental means, or loses use of limbs or eyes.
  2. Managing Wealth

    Life Insurance With an Increasing Death Benefit

    Why buy a life insurance policy with an increasing rather than level death benefit
  3. Financial Advisor

    A Closer Look At Accelerated Benefit Riders

    Accelerated benefit riders can allow policy holders to access the death benefit in their life insurance policy while they are still living if they meet certain conditions. Knowing what you get ...
  4. Financial Advisor

    How Accelerated Benefit Riders Fill Insurance Gaps

    Accelerated benefit riders have become the new darlings in the financial marketplace. Here's why.
  5. Retirement

    How Survivorship Life Insurance Works

    Should you buy a survivorship life insurance policy?
  6. Financial Advisor

    Should You Buy A Life Insurance Disability Rider?

    Does it make sense to pay an additional cost for a waiver of premium rider on a life insurance policy?
  7. Insurance

    Life Insurance: putting a Price on Peace of Mind

    Would your death leave loved ones financially stranded? Find out how to ease your mind and keep them protected.
  8. Financial Advisor

    Advising FAs: Explaining Life Insurance to a Client

    Life insurance was initially designed to protect the income of families, particularly young families in the wealth accumulation phase, in the event of the head of household's death.
  9. Financial Advisor

    Living And Death Benefit Riders: How Do They Work?

    Find out how these different riders work, and which type is right for you.
  10. Financial Advisor

    Getting Life Insurance in Your 20s Pays Off

    Find out how Americans in their 20s can benefit from a well-thought-out life insurance policy, especially if they are able to build cash value for retirement.
RELATED FAQS
  1. Why is accidental life insurance so inexpensive?

    Accidental life insurance is an inexpensive way of obtaining life insurance coverage for yourself or someone else in your ... Read Answer >>
Hot Definitions
  1. Bond

    A bond is a fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows ...
  2. Whole Life Insurance Policy

    A life insurance contract with level premiums that has both an insurance and an investment component. The insurance component ...
  3. Compound Annual Growth Rate - CAGR

    The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer ...
  4. Capital Asset Pricing Model - CAPM

    A model that describes the relationship between risk and expected return and that is used in the pricing of risky securities. ...
  5. Internal Rate Of Return - IRR

    A metric used in capital budgeting measuring the profitability of potential investments.
  6. Current Ratio

    The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term obligations.
Trading Center