Accidental death and dismemberment insurance is similar to life insurance, but it can only pay out if the insured dies in an accident.
Also called AD&D, it’s a special insurance policy which only pays out under strict circumstances where death occurs by way of an accident, and it will not pay out for any other reason.
Often confused with other types of traditional life insurance, accidental does pay out when a person dies, but only if it was not health related, like resulting from acute or chronic diseases, or natural causes.
It can also pay partial or full claims when a person has a severely debilitating injury but survives.
In this article:
Accidental Death Insurance: How It Works
A small percentage of fatalities per year are direct results of accidents, though a majority are health or age related.
According to a CDC report:
About 6% of all deaths in 2017 were accident related, totaling nearly 170,000 total fatalities.
If a person carries this type of policy and dies accidentally, or even within a certain time frame of an accident, the policy would pay a claim in addition to normal life insurance if it is also owned by the deceased (referred to as double indemnity).
Accidents aren’t clearly defined as there are many ways a person could die, but here are the most common:
- Auto Accidents
- Travel Accidents
- Natural Disasters
- Terrorist Attacks
- and more..
The more common way the insurance companies evaluate whether or not they’ll pay out is by comparing the cause of the death to their exclusion list.
An exclusion is an instance which might seem accidental in nature, but not a reason the company would pay due to the nature of the accident or intent.
For example. it might seem accidental if someone were to overdose with drugs or alcohol, but if self induced or lack of responsibility, the insurance company will not be held responsible.
Filing A Claim
Under normal conditions, a person filing for life insurance benefits needs only to provide proof of ownership and a death certificate.
In almost all cases, other than suicide or deaths occurring during the contestability period, this would be enough.
With accidental death and dismemberment insurance policies, however, a greater burden of proof may lie on the beneficiaries as the issuer needs to be very certain of the cause of death, as well as the time frame in which the insured died from the original date of the accident.
This can make the claims process take much longer, but is unavoidable.
Because of the many ways a person could die from an accident, undeniable proof through police reports, an autopsy, or other legal investigations will likely be required to verify both the cause and time of death.
If you find yourself in this situation, don’t take it as the insurance company doubting your claim, but it’s a necessary procedure to minimize false claims.
There are many different ways to go about acquiring an accidental death policy, much like regular life policies.
- You can ask your benefits administrator at your workplace to see if you can have one payroll deducted.
- You can source a policy from many major insurance companies directly.
- You can even get covered from credit card offers, banks, and credit unions.
- You can even contact your life insurance company to see if they can add it on as a rider to any existing policies you have.
Accidental policies also tend to be much simpler to purchase than fully underwritten policies.
Most AD&D contracts don’t require a medical, they don’t ask questions, and you can be covered in as little as a day.
This is great news for those who can’t qualify for regular life insurance, as well, because you can still get this coverage in place despite being turned down for life insurance previously applied for.
Standard issue amounts range from as little as $25,000 up to half a million.
Issue ages are generally up to age 65, with some reduction of benefits at higher ages, and even expiration if the insured reaches 80 or older.
If you’re looking for a standalone policy from a major insurance company, we recommend Fidelity Life Association for a good, affordable product.
One example is if someone were killed in a car wreck but wore their seat belt, or a motorcycle accident where a helmet was used.
Other types of enhancements are for spouses who are killed simultaneously, where the beneficiaries might receive an additional percentage of benefit.
Other Important Information
You may think you have enough coverage in place with life insurance, which may be the case.
However, on average, AD&D costs significantly less per thousand, regardless of health issues, so it could be a very affordable additional benefit to add to your insurance portfolio.
If you are looking for supplemental coverage but life insurance is too expensive, remember that accidental policies only pay for accidents, so it may not be a perfect solution.
Also, check with other entities you’re involved with, from your car or homeowner’s insurance company, to clubs, organizations, and other affiliations to see what they may offer.
Certain occupations, as well, may include access to such accidental death and dismemberment insurance policies already, so check with your human resources contacts.