One of the insurance policies you can add as a rider to your health or life insurance coverage is accidental death and dismemberment insurance.
Policyholders add riders to their insurance coverage to cover some needed parts lacking in their primary coverage. Insurance companies have all-inclusive policies and those they offer as riders to their policyholders; it is why you must research different insurance companies around you and know what they all provide in their insurance coverage. Then, you can discuss perfect situations that may occur, like risks from your job and how to add suitable riders to compensate for your coverage.
Riders are additional policies you can add to your coverage to allow you more benefits and coverage. Riders are not free; they come at a low or cheap fee.
What is an accidental death and dismemberment?
It is an added policy that covers a policyholder from an unintentional death or body dismemberment. Like the name, accidental death is one that was not planned. In line with this, dismemberment is a case where a policyholder accidentally loses a body part or function.
This policy does not come as full coverage but as a rider because it is not an everyday event, so it is limited. Before you add it to your coverage, you should read up on the policy and the terms guiding it. For a better understanding of these terms and conditions, you may employ the services of experts to explain the readings to you.
How accidental death and dismemberment insurance policy works
When you add the policy to your coverage, the beneficiaries assigned to the coverage get an extra payout if you pass away with the corresponding circumstances.
Say a policyholder adds the accidental and dismemberment policy to their coverage and passes away due to unrelated causes; their beneficiaries will not get a payout from the insurance company.
Additionally, when a policyholder with the AD&D passes away outside the agreed period of the policy, the beneficiaries still won’t get anything from the insurance company because the policy has an active period.
However, should the policyholder pass away in a relatable cause like a road accident or other kinds of accident, drowning, fire, shooting, or any sudden accident which happened between the policy window, the beneficiaries will automatically become eligible for a payout from the insurer.
Since the policy is generally added to a life insurance or health insurance coverage, the benefit will be calculated at face value and paid twice the amount of the life or health insurance policy.
This also applies to circumstances surrounding the policyholder losing a limb or other parts of the body, like going dumb, deaf, or blind. The insurer will payout a percentage for these circumstances but not one hundred percent. These payments will be according to the company’s policy, the coverage amount, and the loss’s severity.
Accidental death and dismemberment policy additions and exclusions
These rules are not entirely rigid; insurance companies have unique policy rules. Some companies may exclude some deaths like suicide and illness-induced deaths, while others might include them on their policy list.
That said, most life insurance companies generally cancel out deaths through substance abuse or nonprescription drug overdose. So, such an occurrence does not pay the beneficiaries of the policyholder.
The difference between life insurance coverage and accidental death and dismemberment
Life insurance is a full coverage that covers an individual for the rest of their lives. However, there is temporary life insurance coverage for those who do not want permanent life insurance coverage.
Life insurance does not have many limitations as AD&D and has lesser strict rules. Though it is more expensive than the accidental death and dismemberment policy (AD&D).
Life insurance offers a lump of money to the beneficiaries in the event of the policyholder passing. So long the coverage is active with updated premium payment.
In contrast, the AD&D is a rider you can add to your policy. It only pays if the policyholder loses a limb or the function of a body part in an accidental injury. So you can be alive and receive the payouts from your insurance company. Again, it pays the policyholder beneficiaries if they pass away in certain conditions not categorized as natural causes.
Benefits of accidental and dismemberment policy
Policyholders go the extra mile to add layers of coverage to their main policy. It gives a satisfactory feeling knowing that if anything happens, you are covered.
Now, adding the accidental death and dismemberment policy is not only pleasing, but it comes at a very low premium. It means that policyholders with this policy pay a cheap premium because what the AD&D covers is quite limited. Other rider options usually cost more than the AD&D, and it stays cheap throughout the duration of the policy.
Also, you get to enjoy great benefits known as double indemnity, which is the compensation your insurance company pays for damages. So, this time, it comes in double because of each of the policies; the accidental death policy and the dismemberment policy.
Furthermore, the accidental death and dismemberment policy can come from your job. Employers offer this policy as coverage to their workers, or it will come as a group coverage from the organization you joined.
Disadvantages of AD&D
Accidental death and dismemberment policy come with so many limitations that sometimes make it undesirable to policyholders.
Firstly, even while paying your premiums regularly, it becomes impossible for your family to receive any benefits if the policyholder suddenly passes away outside the slated period.
Also, the policy strictly decides the situation that is eligible enough for a payout. Many sudden events are canceled out, and the family is denied pay out. The insurance company will insist on denying the family the benefits even when it has nothing to do with self-inflicted death but sudden credible death.
Additionally, getting this policy from your workplace does not guarantee complete protection. It does not matter how long you’ve worked in the organization or workplace; once you leave the job, your AD&D policy stops working. So, it means that the policy is not portable if it comes from your workplace.
Riders are great options for policyholders, but appropriate riders at an affordable premium are precisely what you need.