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Accidental Death & Dismemberment Coverage

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Joel Ohman
Founder, CFP®

UPDATED: Mar 13, 2020

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death valley

It’s not a subject we love to bring up, but it beats burying your head in the sand.

Accidental Death & Dismemberment coverage, also known as “AD&D,” is a type of life insurance policy (or rider) that will pay out a benefit for death caused by…wait for it…an accident or dismemberment resulting from an accident.

Continue reading before you panic and assume your current life insurance policy DOESN’T pay out benefits if a death occurs as a result of an accident.

That’s certainly not the case. AD&D is usually an additional benefit paid ABOVE what your life insurance policy would already pay.

(How much life insurance do I need?)

Then Why Would I Want It?

There are a couple of reasons why you may consider this coverage. Primarily, it is usually very cheap to purchase.

As discussed above, you may be able to simply add it to your existing policy as an insurance rider…for just a few more bucks per month.

Let’s look at an example using a term life insurance policy:

The younger we are, the less life insurance coverage we typically purchase. Put simply, we statistically have a lot of “life” left.

This is a time to pay down bills, raise children and build our finances for when we get older. We certainly don’t expect to die just from bad health.

However, we are always at risk of “accidental” death. Accidental deaths are one of the top causes of death in the United States. This is the case at any age.

So it could certainly make sense to “pad” our life insurance policies in case the unexpected occurs.

What About Dismemberment?

Perhaps you are comfortable with the amount of life insurance you already have. Great!

But what if you were to become unable to work (produce income) as a result of an accident that didn’t kill you? Rather, you were to lose a limb, finger or your vision as a result of an accident?

This is where dismemberment coverage would kick in. Let’s face it. Most of us require the use of our limbs and eyesight to perform many of the tasks associated with our jobs.

It almost sounds ridiculous to say, but life insurance will not pay out a dime in the event you DON’T die.

Therefore our term life insurance example wouldn’t result in a payout.

Note: The “dismemberment” portion of this type of insurance policy will not offer the same benefit amount as death would afford you (or rather your beneficiary).

So your $100,000 term life policy would not pay out $100,000 in the event you suffered dismemberment.

Be sure to read your benefits statement carefully when entertaining the cost of this policy or rider.

And understand the two coverage types, accidental death and dismemberment, are not always packaged together in one policy.

Read more: Top 10 life insurance companies.

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