Darrell Bryant Retirement Blog

Thursday, August 1, 2019

Should You Have Accidental Death And Dismemberment Insurance?

By Darrell Bryant

By Darrell Bryant

There are a lot of insurance products out there. Not only can you protect yourself with life insurance, disability insurance, supplemental health insurance, or long-term care insurance, but then there’s Accidental Death and Dismemberment (AD&D) insurance. Do you really need it? Is it worth the extra coverage? Here’s what you need to know.

What Is AD&D Insurance?

AD&D insurance is often referred to as a double indemnity rider as it’s generally added on to a life insurance policy. In other words, AD&D insurance provides your beneficiaries with additional income above and beyond your life insurance amount depending on how you met your end. Most insurers cap the maximum benefit a beneficiary can receive, but these payments tend to mirror the life insurance plan’s face amount. For instance, in the event of an accidental death or dismemberment, a beneficiary would receive a life insurance payment with the AD&D payment matching the original life insurance face-value payout.

Besides death, AD&D plans cover dismemberment accidents like losing limbs, eyesight, hearing, or the loss of a bodily function. While most plans cover fundamental dismemberment accidents, these can vary based on each policy.

Life Insurance Vs. AD&D Insurance

Think of life insurance as the cake and AD&D insurance as the icing. If you had to choose between the two, life insurance is the safe bet because it covers more common misfortunes like death due to illness or old age. However, AD&D plans could be right for your situation if you have many dependents or you work in industries with high equipment injury rates, such as manufacturing. (1) Just remember: The best life insurance policy is one that is a) in force, and b) pays a death benefit when your heart stops beating.

Since AD&D claims are much lower than standard life insurance claims, these policies have less expensive premiums. As a result, many employers subsidize basic AD&D coverage for their employees. If this benefit is available to you, it would be prudent to take advantage of it!

What Does AD&D Insurance Cover?

While most AD&D plans cover events like homicides, falls, traffic incidents, and drowning, they have some common exclusions. These exclusions can be death or dismemberment due to suicide, drug overdose, war injuries, or felonious acts. Most policies have this condition in common, but others add in provisions for professional sporting events. Some other exclusions include participating in risky activities, such as car racing and skydiving. Other less common and less risky examples include hernias along with bacterial infections. Like most insurance companies, AD&D providers evaluate risky activities and determine if it fiscally makes sense to cover each one.

The Bottom Line

The point of insurance is to offer protection to the policy and owner and their beneficiaries. So if you have loved ones relying on you or have a job that requires you to take physical risks, an AD&D policy could be helpful. 

These plans can be complicated and coverage varies from company to company, so carefully examine each policy’s rules, regulations, and payment terms and compare to others before making your final decision. If you are curious about AD&D insurance or want to make sure your life insurance policy is up to date, call us at (402) 932-2141 or email contact@dbretirement.com to schedule an insurance review.

About Darrell

Darrell Bryant, CFS®, CAS® is Omaha’s Retirement Strategist. As the founder of D. Bryant Retirement Strategies, he focuses on helping individuals and couples nearing retirement do so successfully. Along with more than 30 years of experience, he received the Certified Fund Specialist (CFS®) designation and a Certified Annuity Specialist (CAS®) designation from the Institute of Business & Finance. Passionate about helping as many people as possible in his community, he hosts Retirement Strategies Radio, heard Saturday mornings at 8 a.m. on 1110 KFAB. He has also written articles on financial planning that have been featured on Fortune.com, FoxBusiness.com, Money.com, and in the Midland Business Journal. To learn more, visit his blog, his website, or connect with him on LinkedIn.


(1) https://www.travelers.com/resources/business-industries/manufacturing/top-causes-of-manufacturing-injuries