Accidental death and dismemberment insurance
Encyclopedia
In insurance
, Accidental Death and Dismemberment (also known as AD&D) is a term used to describe a policy that pays benefits to the beneficiary if the cause of death is due to an accident
.
held by the client. This is called double indemnity
coverage and is often available even when accidental death insurance is merely an add-on to a regular life insurance plan. Some of the covered accidents include traffic accidents, exposure, homicide
, falls, heavy equipment accidents, and drowning
. Accidental deaths are the fifth leading cause of death in the U.S.
as well as in Canada
.
Accidental death insurance is not an investment
vehicle and thus clients are paying only for sustained protection. Insurance premiums are expected to rise in time. Most policies have to be renewed periodically (with revised terms), although the client's consent with renewal is often implicitly assumed.
, non-commercial radiation
, war
injury, and natural causes
are generally not covered by AD&D. Similarly, death while under the influence of any non-prescribed drug
s or alcohol
is most likely exempt from coverage. Overdose with toxic
or poisonous substances
and injury of an athlete during a professional sport
ing event may void the right to claim too.
Some insurance carriers will tailor their clients' coverage to include some of the above risks, but every such extension will be accompanied by increased premiums.
Due to these restrictions, the process of claiming the benefit
may be relatively lengthy; the deceased client may have to undergo autopsy
and the accident may have to be officially investigated before a claim is approved by the insurer.
. The types of injuries covered and the amount paid vary by insurer and package, and are explicitly enumerated in the insurance policy.
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
, Accidental Death and Dismemberment (also known as AD&D) is a term used to describe a policy that pays benefits to the beneficiary if the cause of death is due to an accident
Accident
An accident or mishap is an unforeseen and unplanned event or circumstance, often with lack of intention or necessity. It implies a generally negative outcome which may have been avoided or prevented had circumstances leading up to the accident been recognized, and acted upon, prior to its...
.
Accidental Death
In the event of an accidental death, this insurance will pay benefits in addition to any life insuranceLife insurance
Life insurance is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger...
held by the client. This is called double indemnity
Indemnity
An indemnity is a sum paid by A to B by way of compensation for a particular loss suffered by B. The indemnitor may or may not be responsible for the loss suffered by the indemnitee...
coverage and is often available even when accidental death insurance is merely an add-on to a regular life insurance plan. Some of the covered accidents include traffic accidents, exposure, homicide
Homicide
Homicide refers to the act of a human killing another human. Murder, for example, is a type of homicide. It can also describe a person who has committed such an act, though this use is rare in modern English...
, falls, heavy equipment accidents, and drowning
Drowning
Drowning is death from asphyxia due to suffocation caused by water entering the lungs and preventing the absorption of oxygen leading to cerebral hypoxia....
. Accidental deaths are the fifth leading cause of death in the U.S.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
as well as in Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
.
Accidental death insurance is not an investment
Investment
Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time...
vehicle and thus clients are paying only for sustained protection. Insurance premiums are expected to rise in time. Most policies have to be renewed periodically (with revised terms), although the client's consent with renewal is often implicitly assumed.
Common exclusions
Every insurers maintains a list of events and circumstances that void the insured's entitlement to his or her accidental death benefit. Death by illness, suicideSuicide
Suicide is the act of intentionally causing one's own death. Suicide is often committed out of despair or attributed to some underlying mental disorder, such as depression, bipolar disorder, schizophrenia, alcoholism, or drug abuse...
, non-commercial radiation
Radiation
In physics, radiation is a process in which energetic particles or energetic waves travel through a medium or space. There are two distinct types of radiation; ionizing and non-ionizing...
, war
War
War is a state of organized, armed, and often prolonged conflict carried on between states, nations, or other parties typified by extreme aggression, social disruption, and usually high mortality. War should be understood as an actual, intentional and widespread armed conflict between political...
injury, and natural causes
Death by natural causes
A death by natural causes, as recorded by coroners and on death certificates and associated documents, is one that is primarily attributed to natural agents: usually an illness or an internal malfunction of the body. For example, a person dying from complications from influenza or a heart attack ...
are generally not covered by AD&D. Similarly, death while under the influence of any non-prescribed drug
Drug
A drug, broadly speaking, is any substance that, when absorbed into the body of a living organism, alters normal bodily function. There is no single, precise definition, as there are different meanings in drug control law, government regulations, medicine, and colloquial usage.In pharmacology, a...
s or alcohol
Alcohol
In chemistry, an alcohol is an organic compound in which the hydroxy functional group is bound to a carbon atom. In particular, this carbon center should be saturated, having single bonds to three other atoms....
is most likely exempt from coverage. Overdose with toxic
Toxicity
Toxicity is the degree to which a substance can damage a living or non-living organisms. Toxicity can refer to the effect on a whole organism, such as an animal, bacterium, or plant, as well as the effect on a substructure of the organism, such as a cell or an organ , such as the liver...
or poisonous substances
Poison
In the context of biology, poisons are substances that can cause disturbances to organisms, usually by chemical reaction or other activity on the molecular scale, when a sufficient quantity is absorbed by an organism....
and injury of an athlete during a professional sport
Sport
A Sport is all forms of physical activity which, through casual or organised participation, aim to use, maintain or improve physical fitness and provide entertainment to participants. Sport may be competitive, where a winner or winners can be identified by objective means, and may require a degree...
ing event may void the right to claim too.
Some insurance carriers will tailor their clients' coverage to include some of the above risks, but every such extension will be accompanied by increased premiums.
Due to these restrictions, the process of claiming the benefit
Cause of action
In the law, a cause of action is a set of facts sufficient to justify a right to sue to obtain money, property, or the enforcement of a right against another party. The term also refers to the legal theory upon which a plaintiff brings suit...
may be relatively lengthy; the deceased client may have to undergo autopsy
Autopsy
An autopsy—also known as a post-mortem examination, necropsy , autopsia cadaverum, or obduction—is a highly specialized surgical procedure that consists of a thorough examination of a corpse to determine the cause and manner of death and to evaluate any disease or injury that may be present...
and the accident may have to be officially investigated before a claim is approved by the insurer.
Dismemberment
Fractional amounts of the policy will be paid out if the covered employee loses a bodily appendage or sight because of an accident. Additionally, AD&D generally pays benefits for the loss of limbs, fingers, sight and permanent paralysisParalysis
Paralysis is loss of muscle function for one or more muscles. Paralysis can be accompanied by a loss of feeling in the affected area if there is sensory damage as well as motor. A study conducted by the Christopher & Dana Reeve Foundation, suggests that about 1 in 50 people have been diagnosed...
. The types of injuries covered and the amount paid vary by insurer and package, and are explicitly enumerated in the insurance policy.
Coverage Types
There are four common types of group AD&D plans offered in the United States:- Group Life Supplement - the AD&D benefit is included as part of a group life insurance contract, and the benefit amount is usually the same as that of the group life benefit;
- Voluntary - the AD&D is offered to members of a group as a separate, elective benefit, and premiums are generally paid as a payroll deduction;
- Travel Accident (Business Trip) - the AD&D benefit is provided through an employee benefit plan and provides supplemental accident protection to workers while they are traveling on company business (the entire premium is usually paid by the employer);
- Dependents - Some group AD&D plans also provide coverage for dependents.
See also
- Health insurance in the United StatesHealth insurance in the United StatesThe term health insurance is commonly used in the United States to describe any program that helps pay for medical expenses, whether through privately purchased insurance, social insurance or a non-insurance social welfare program funded by the government...
- Bureau of Labor StatisticsBureau of Labor StatisticsThe Bureau of Labor Statistics is a unit of the United States Department of Labor. It is the principal fact-finding agency for the U.S. government in the broad field of labor economics and statistics. The BLS is a governmental statistical agency that collects, processes, analyzes, and...
- InsuranceInsuranceIn law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
- Life insuranceLife insuranceLife insurance is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger...
- Term life insuranceTerm life insuranceTerm life insurance or term assurance is life insurance which provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or...
- Permanent life insurancePermanent life insurancePermanent life insurance is a form of life insurance such as whole life or endowment, where the policy is for the life of the insured, the payout is assured at the end of the policy and the policy accrues cash value....
- Health insuranceHealth insuranceHealth insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care expenses among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is...
- Health careHealth careHealth care is the diagnosis, treatment, and prevention of disease, illness, injury, and other physical and mental impairments in humans. Health care is delivered by practitioners in medicine, chiropractic, dentistry, nursing, pharmacy, allied health, and other care providers...
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