You may already have a life insurance which is primarily needed to support your loved ones when the unexpected happens. Health insurance is also one of the most common types of insurance. But have you ever heard of AD&D?
AD&D stands for Accidental Death and Dismemberment Insurance which many insurance companies offer either on top of your current insurance or in A La Carte depending on you. It is mostly called a “rider”. AD&D covers death by accidental means (rather than natural causes) and dismemberment, which includes loss of the use of certain body parts (including limbs or eyesight.)
These riders are usually written in such a way that the insurer must pay double the amount payable otherwise, or a specific amount of continuous income payments, and are sometimes called double indemnity riders. AD&D insurance is often offered by employers as an extra option on group health plans.
Compared to the Life Insurance which has the primary purpose to leave something for your beneficiaries AD&D Insurance provides benefit if you sustain a covered accident injury such as speech, hearing, or sight loss, loss of limb, or loss of thumb and index finger. AD&D also provides a benefit for loss of life due to covered accident.
As mentioned above, Accidental death and dismemberment (AD&D) policies can be purchased as a standalone product or as an option on life and group insurance policies. They pay out a lump-sum death benefit, as life insurance does, in the event you're killed accidentally or die later as the direct result of an accident. This can sharply limit their usefulness. In 2006 the Centers for Disease Control and Prevention found only 121,599 deaths accidental from the year's total of 2,426,264. That's approximately 0.5 percent. However, AD&D policies also pay if you're maimed in an accident. Typically they pay half the benefit for loss of one limb or eye, and the full benefit for two.
When you're deciding on your coverage, life insurance is fundamental for most young couples. In comparison, AD&D protection is only of marginal value. If your life or group policy includes AD&D, don't include the benefit amount in your planning. If the policy pays it'll be a pleasant bonus for your beneficiaries, but you shouldn't count on it. Instead, calculate how much money it will take for your beneficiaries to maintain their lifestyle. If you don't know how to do that, your broker or various online calculators can help.