Accidental Death and Dismemberment Insurance (AD&D)

Accidental death and dismemberment insurance (AD&D) is usually a rider to a health insurance or life insurance policy. The rider covers the unintentional death or dismemberment of the insured. Dismemberment includes the loss, or the loss of use, of body parts or functions (e.g., limbs, speech, eyesight, or hearing). Because of coverage limitations, prospective buyers should carefully read the terms of the policy.

The AD&D policy 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.

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 in the event the insured dies accidentally. Benefits typically cannot exceed a certain amount. Most insurers cap the amount payable under these circumstances.  Since most AD&D payments usually mirror the face value of the original life insurance policy, the beneficiary 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.   

Typically, the AD&D policy pays 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. It is uncommon for a policy to pay 100% of the policy amount for anything less than a combination of the loss of a limb and the loss of a major bodily function, such as sight or hearing in at least one eye or ear.

Each insurance provider includes a list of circumstances excluded from coverage. In most instances, the list consists of suicide, death from illness or natural causes, 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.  Usually, if the insured’s loss occurs because of their felonious act, no benefit is payable.