Accidental Death and Dismemberment Insurance (AD&D)

Accidental Death and Dismemberment Insurance (AD&D) provides a tax-free lump-sum payment if you die or suffer a severe injury as the direct result of an accident. It is designed to offer financial protection for you and your family in the event of an unexpected, accidental injury or loss that causes death, dismemberment, or permanent disability.

This type of insurance pays different benefit amounts depending on the nature and severity of the loss. For example, full payment is made in the case of accidental death, while partial benefits apply for the loss of a limb, sight, hearing, or paralysis. AD&D is often included as part of group benefit plans or offered as an optional rider on life or health insurance policies. Coverage is valid only when the injury or death occurs due to an external, sudden, and accidental cause, and within a specific time frame following the incident, typically 12 months.

Example:

If a policyholder with $100,000 in AD&D coverage dies as the result of a covered accident, the beneficiary receives the full $100,000 benefit. If the policyholder loses one leg in an accident, the plan might pay 50 percent of the total benefit ($50,000).

What to Watch For:

AD&D coverage does not pay for deaths or injuries caused by illness, medical conditions, suicide, or risky activities like professional sports or intoxication. Review the schedule of losses in your policy to understand how different injuries are compensated. Keep your beneficiary information up to date to ensure prompt payment if a claim arises.