Basics of Accidental Death Dismemberment Insurance Policies

Optional supplementary benefits add tremendous value to life policies. The most common additional benefit offered with those is the Accidental Death and Dismemberment (AD&D) rider. This rider embodies two factions:

1) Accidental Death
2) Dismemberment

The Accidental Death rider:

For a minimal additional premium payment, the insurer would pay an additional amount (up to twice the sum assured) to the estate of the insured. The provision here is that the death of the insured must be accidental. Accidental death is defined as death caused by accidental bodily injury. It would not include death by suicide and exclusions would occur if the death was caused by dangerous activities not disclosed on the application.

Dismemberment: This covers permanent disability that results from accidental bodily injury as well. Self-inflicted loss of limbs or sight is typically excluded from this benefit. The insurer will define in the permanent disability covered in the policy document. The insurer would usually pay a percentage of the sum assured depending on the severity of the dismemberment and according to the scale of benefits. It is important to fully understand the terms of dismemberment since those are explicitly stated and legally binding. In one case, there is an insurer that only provides compensation if hands or feet are completely severed or if eyesight is completely lost.

Generally, AD&D contains a clause that states that the insurer will not be liable for both accidental death benefits and dismemberment benefits where losses occur in the same accident. A dismemberment claim would usually discontinue the rider once the claim is settled subject to the insurer’s discretion.

In some cases, the AD&D rider is offered alongside an accidental death rider. The easy choice would be the AD&D rider, since this is more comprehensive and it not usually much more expensive. Accidental death and dismemberment riders are also available on term insurance plans. These riders are important in insuring against disability. Other life insurance provisions that cover disability include: waiver of charges (or premium), disability income benefit and the critical illness benefit. In cases where the critical illness benefit includes dismemberment provisions, it is unnecessary to take the AD&D rider. Such cases would require the accidental death rider alone.