insurance

Accidental Death and Dismemberment

Insurance coverage that pays benefits if the policyholder dies or loses limbs, sight, hearing, or speech due to an accident. This supplemental coverage typically pays a lump sum benefit in addition to regular life insurance and excludes deaths from illness or natural causes.

Example

“Sarah's employer offered accidental death and dismemberment coverage as part of her benefits package, providing an additional $100,000 if she died in an accident.”

Memory Tip

Remember 'AD&D' - Accidents Deliver Dollars for unexpected traumatic events only.

Why It Matters

AD&D insurance provides affordable additional protection for families against sudden financial hardship from accidents, which are a leading cause of death and disability for working-age adults. It's often much cheaper than equivalent life insurance coverage because it only covers accidental causes.

Common Misconception

People often assume AD&D coverage is the same as regular life insurance, but it only pays for accidental deaths and injuries. Deaths from heart attacks, cancer, or other illnesses are not covered, making it a supplement to, not a replacement for, comprehensive life insurance.

In Practice

John purchases a $250,000 AD&D policy for $15 per month through his employer. When he loses his right hand in a machinery accident at work, the policy pays $125,000 (50% of the face value for loss of one hand). If he had lost both hands, he would receive the full $250,000. His regular health insurance covers medical bills, but the AD&D payment helps replace lost income and covers home modifications needed for his disability.

Etymology

The term emerged in the early 1900s as industrial accidents became more common. 'Dismemberment' comes from Old French 'desmembrer' meaning 'to remove limbs,' reflecting the coverage's focus on traumatic injuries.

Common Misspellings

accidental death and dismembermantaccidential death and dismembermentaccidental death and dismemberemntaccidental death and dismembermemt

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