The examples and perspective in this article deal primarily with the United States and do not represent a worldwide view of the subject. (November 2018)
In insurance, accidental death and dismemberment (AD&D) is a policy that pays benefits to the beneficiary if the cause of death is an accident. This is a limited form of life insurance which is generally less expensive, or in some cases is an added benefit to an existing life insurance policy.
In the event of an accidental death, this insurance will pay benefits in addition to any life insurance but only up to a set amount total regardless of any other insurance held by same insurer, held by the client. This is called double indemnity coverage and is often available even when accidental death insurance is merely an add-on to a regular life insurance plan. Some of the covered accidents include traffic accidents, exposure, homicide, falls, heavy equipment accidents and drowning. Accidental deaths are the fifth leading cause of death in the U.S. as well as in Canada.
Accidental death insurance is not an investment vehicle and thus clients are paying only for sustained protection. Most policies have to be renewed periodically (with revised terms), although the client's consent with renewal is often implicitly assumed.
Every insurer maintains a list of events and circumstances that void the insured's entitlement to his or her accidental death benefit. Death by illness, suicide, non-commercial aviation, war injury, and natural causes are generally not covered by AD&D. Similarly, death while under the influence of any non-prescribed drugs or alcohol is most likely exempt from coverage. Overdose with toxic or poisonous substances and injury of an athlete during a professional sporting event may void the right to claim too.
Some insurance carriers will tailor their clients' coverage to include some of the above risks, but every such extension will be accompanied by increased premiums.
Due to these restrictions, the process of claiming the benefit may be relatively lengthy; the deceased client may have to undergo autopsy and the accident may have to be officially investigated before a claim is approved by the insurer.
Fractional amounts of the policy will be paid out if the covered employee loses a bodily appendage or sight because of an accident. Additionally, AD&D generally pays benefits for the loss of limbs, fingers, toes, sight and permanent paralysis. The types of injuries covered and the amount paid vary by insurer and package, and are explicitly enumerated in the insurance policy.
There are four common types of group AD&D plans offered in the United States:
- Group Life Supplement – the AD&D benefit is included as part of a group life insurance contract, and the benefit amount is usually the same as that of the group life benefit.
- Voluntary – the AD&D benefit is offered to members of a group. An example is an AD&D policy provided in an initial nominal amount with premiums paid by another party (such as a small $1,000 AD&D policy offered to credit union members, with the premium paid for by the credit union itself), with higher elective benefits offered to members where the member must pay the additional premiums separately.
- Travel Accident (Business Trip) – the AD&D benefit is provided through an employee benefit plan and provides supplemental accident protection to workers while they are traveling on company business (the entire premium is usually paid by the employer).
- Dependents – Some group AD&D plans also provide coverage for dependents.
- Accidents or Unintentional Injuries by Centers for Disease Control and Prevention, accessed July 14, 2011.
- "BLS Information". Glossary. U.S. Bureau of Labor Statistics Division of Information Services. February 28, 2008. Archived from the original on 6 May 2009. Retrieved 2009-05-05.
- Margaret E. Lynch, Editor, "Health Insurance Terminology," Health Insurance Association of America, 1992, ISBN 1-879143-13-5
- "Accidental Death Insurance Coverage and Exclusions". Glossary. death-insurance.com. March 22, 2016. Retrieved 2016-03-22.
- Fundamentals of Health Insurance: Part A, Health Insurance Association of America, 1997, ISBN 1-879143-36-4