accident & Health insurance

Accidental death insurance, also known as accidental death and dismemberment (AD&D) insurance, is a type of insurance policy that provides a death benefit or financial compensation if the insured person dies due to an accident or experiences certain types of injuries resulting in dismemberment or loss of bodily functions. Accidental death insurance is distinct from traditional life insurance, as it specifically covers accidental deaths and injuries rather than deaths resulting from illness or natural causes.

Accidental Death Insurance is a low-cost alternative to life insurance. It is a way for people who might otherwise be declined or worry about being rejected for traditional life insurance. Keep in mind there are a handful of life insurance policies which will approve anyone.

Accidental death insurance policies are also a cost-effective means to add extra financial protection along with a traditional life insurance policy.

You also commonly see this called accidental death and dismemberment. The shorthand for this type of policy is AD&D, AD, or ADB insurance.

Keep in mind that some accidental death policies do not provide benefits for dismemberment, like loss of limbs or vision. It’ll depend on your policy.

Accidental death insurance provides an inexpensive safety net for your family. Not only will you be insured from death as a result of an accident, but many policies also extend coverage to your spouse and children.

The biggest benefits of accidental death insurance are that it’s easy to qualify for and inexpensive.

How Accidental Death and Dismemberment (AD&D) Insurance Works

AD&D insurance contains a schedule that details the terms and percentages of the various benefits and covered special circumstances. For example, if an insured dies from injuries sustained in an accident, the death must occur within a specified period for benefits to be paid.

Accidental Death

When adding an AD&D rider, also known as a “double indemnity” rider, to a life insurance policy, the designated beneficiaries receive benefits from both the rider and the underlying policy if the insured dies accidentally.

Benefits typically cannot exceed a certain amount, as detailed in the rider. As most AD&D insurance payments mirror the face value of the original life insurance policy, the beneficiary normally receives a benefit twice the amount of the life insurance policy’s face value upon the accidental death of the insured.

Typically, accidental death covers exceptional circumstances, such as exposure to the elements, traffic accidents, homicide, falls, drowning, and accidents involving heavy equipment.

AD&D insurance is supplemental life insurance and not an acceptable substitute for a full life insurance policy.

Dismemberment

Most AD&D policies pay a percentage for the loss of a limb, partial or permanent paralysis, or the loss of use of specific body parts, such as the loss of sight, hearing, or speech. The types and extent of injuries covered are particular to and defined by each insurer and policy.

Voluntary AD&D

Voluntary accidental death and dismemberment (VAD&D) insurance is an optional financial protection plan that provides a beneficiary with cash if the policyholder is accidentally killed or loses certain body parts. VAD&D is also a limited form of life insurance and is generally less expensive than a full life insurance policy.

Premiums are based on the amount of insurance purchased. VAD&D insurance is typically purchased by workers in occupations that place them at high risk of physical injury. Most policies are renewed periodically with revised terms.

How much such a policy pays depends not only on the amount of coverage purchased but also on the type of claim filed. For example, the policy might pay 100% if the policyholder is killed or becomes quadriplegic, but only 50% for the loss of a hand or the permanent loss of hearing in one ear or sight in one eye.

Common Exclusions

Each insurance provider includes a list of exclusions. In most instances, the list includes suicide, death from illness or natural causes, and wartime injuries.

Other common exclusions include death resulting from the overdose of toxic substances, death while under the influence of nonprescription drugs, suicide, certain recreational activities, and the injury or death of a professional athlete during a sporting event.

Usually, if the insured’s loss occurs because of a felonious act on his or her part, no benefit is payable. People working in high-risk jobs (such as public safety and the military) may not qualify for AD&D coverage.

Accidents are the fourth leading cause of death in the United States.

Advantages and Disadvantages of AD&D Insurance

Advantages
Financial assistance: An accidental death impacts the surviving loved ones emotionally as well as financially, as they must now deal with a sudden loss of income. The death benefit from an AD&D policy can add peace of mind by lessening that burden.

Supplements lost income: Because the loss of income will carry forward, AD&D policies provide funds in addition to the death benefit offered through the traditional life insurance on the insured. The death benefit amount is usually equal to or some multiple of the traditional policy’s death benefit amount. This extra benefit may be known as double indemnity, as the death benefit usually doubles with this added feature.

Lower premiums: Because coverage is limited to certain events causing accidental death or loss of limb, premiums are relatively inexpensive. If offered through an employer, it may only cost participating employees a few dollars per month. Even when purchased individually, the costs are considerably less than rates for term insurance offering the same face amount.

No medical exam: Most insurance companies do not require a medical exam to obtain AD&D coverage (particularly group AD&D offered through an employer).

Disadvantages
Only pays for certain incidents: This limited coverage can be disadvantageous to policyholders because it only pays upon certain events. If death occurs outside of these limitations, the AD&D policy does not pay. Premiums paid are forfeited and remain with the insurer.

For example, if someone dies as the result of a terrorist attack, no benefit is paid because that is considered a wartime act. Insurers have the ability to make exceptions to this, as was done for victims of the 9/11 terrorist attacks in the United States.

Low likelihood of payout: The leading cause of death in the United States is heart-related issues, while accidents rank fourth.

Therefore, it is more likely that someone will die from natural causes than from an accident, especially older adults and those not engaged in risky work.

Group coverage lost when you change jobs: If coverage is group or employer-sponsored, it may not be portable if the insured leaves the group or employer. Often, coverage ends upon the termination of the insured’s affiliation with the sponsor, leaving them unprotected until new coverage is issued.

False sense of security: Having AD&D may give policyholders a false sense of security if they include the face amount in their cumulative life insurance totals during planning. Because AD&D only pays upon certain events, it should not be used to determine whether your life insurance portfolio is sufficient. Traditional life insurance should be adequate to provide necessary financial support to the beneficiaries. AD&D supplements that payout in the unlikely event that death occurs from an accident. Still, it adds an extra benefit with the sudden and unexpected departure of the insured.

What Is the Difference Between Life Insurance and AD&D Insurance?

Accidental death and dismemberment (AD&D) coverage only pays a benefit if death results from a covered accident or upon the loss (or loss of use) of a limb. In contrast, coverage is broader with life insurance. Life insurance policies pay benefits upon the death of the insured, despite how the death occurred. (Note: Exceptions apply depending on policy terms.)

Here are key features and aspects of accidental death insurance:

1. Coverage for Accidents: Accidental death insurance provides coverage in the event the insured person dies as a direct result of an accident. This includes accidents such as car crashes, falls, industrial accidents, drowning, and other unexpected events.
2. Dismemberment Coverage: In addition to covering accidental death, AD&D insurance may also provide benefits for specific types of injuries that result in the loss of limbs or bodily functions, such as the loss of a limb, vision, hearing, or the ability to speak.
3. Death Benefit: If the insured person dies due to a covered accident, the policy pays out a death benefit to the designated beneficiaries. This benefit is typically a lump sum payment.
4. Dismemberment Benefit: If the insured person suffers a covered injury that results in dismemberment or loss of bodily functions, the policy pays a benefit that is a percentage of the death benefit. The specific amount depends on the severity of the injury.
5. Accidental Means Requirement: AD&D policies often include a provision known as the “accidental means” requirement. This means that for coverage to apply, the injury or death must result from an accident that is both unexpected and unforeseen. In other words, intentional acts or injuries from known risks may not be covered.
6. Exclusions: Accidental death insurance policies typically have exclusions, which are circumstances or events not covered by the policy. Common exclusions may include deaths resulting from pre-existing medical conditions, self-inflicted injuries, or the use of drugs or alcohol.
7. Additional Riders: Some AD&D policies offer optional riders or enhancements that can provide additional coverage, such as coverage for common carrier accidents (e.g., accidents while traveling on public transportation), hospitalization benefits, or coverage for specific types of accidents.
8. Affordability: Accidental death insurance is often more affordable than traditional life insurance because it covers a narrower range of risks (accidental deaths and injuries) and does not include coverage for deaths from natural causes or illness.
9. Supplemental Coverage: AD&D insurance is often purchased as supplemental coverage to complement traditional life insurance. It can provide an extra layer of financial protection in case of unexpected accidents.

Summary

It’s important for individuals considering accidental death insurance to carefully review policy terms, conditions, and exclusions to understand what is covered and under what circumstances. AD&D insurance can be a valuable addition to a comprehensive insurance portfolio, especially for individuals with higher-risk occupations or lifestyles. However, it should not be viewed as a replacement for traditional life insurance, which provides broader coverage for various causes of death, including illness and natural causes.

How USA Investment Solutions Can Help

Our primary goal is to assist families in safeguarding their financial well-being.  We partner with over 90 of the country's highest-rated life insurance companies.  We will shop them all to find you the lowest rate for the coverage and benefits, taking into account their individual needs and health status. We understand that each individual, business, and family requires a tailored life insurance solution. Our mission is to assist you in discovering the perfect plan for your needs. or complimentary quotes and consultations, please reach out to us s at (714) 794-2009, email us at [email protected], or fill out our contact form.  We're here to assist you, and there's no pressure to commit. Even if you're currently working with a professional, seeking a second opinion can offer valuable insights and perspectives.