What Is Supplemental AD&D Insurance?

A quote sometimes attributed to Field Marshall Foch of WWI fame states that war is "simple enough in concept, but unfortunately complicated in its execution." That's also true of the insurance industry. While the basic concept is simple enough – suffer a loss, get compensated – the picture can quickly get muddied by the sheer number of options available. One available option in many group or life insurance plans is supplemental AD&D insurance, which protects against accidental death and dismemberment.

TL;DR (Too Long; Didn't Read)

Supplemental AD&D insurance, sometimes offered alone or as a supplement to other life insurance programs, provides additional money to your beneficiaries in the event you die or become dismembered in an accident. However, these policies often have some exclusions.

About AD&D Insurance

An accidental death and dismemberment policy, as the name suggests, provides protection in the case of an accident. If you're killed, it pays the specified amount to your beneficiaries above and beyond the death benefit of any life insurance policy you might have. If you're maimed or dismembered in an accident, the policy will also pay out a predefined amount.

One formula that's widely used pays half the death benefit for loss of one limb, hand or eye – and pays the full benefit if any two are lost. Other policies might set out a sliding scale of benefits corresponding to specific injuries.

With Group Insurance

Group benefit plans through your employer, alumni association or professional organization can provide a substantial degree of coverage for a modest price. Most plans include a basic amount of AD&D coverage. You can add supplemental coverage up to a specified amount for a modest additional premium. Some policies are especially liberal, extending the option of AD&D coverage to the insured person's spouse and sometimes even dependent children.

With Life Insurance

You can buy AD&D policies alone, but they are more commonly added to another product. That's why they're often referred to as "supplemental" AD&D. Life insurance policies from most insurers offer a variety of optional features and riders, and AD&D provides additional coverage at a surprisingly low price.

The added death benefit can increase your base policy to a substantial degree, plus provide protection against blindness or dismemberment, which isn't included in your basic life policy. These can make AD&D appear an attractive option, although it has some notable drawbacks.

The Value Decision

AD&D coverage only pays for death or dismemberment as the direct result of an accident, and accidents cause only a relatively small percentage of deaths. For example, according to the Centers for Disease Control and Prevention, of the more than 2.7 million deaths each year, only 161,374 can be attributed to accidents. That's why the coverage is so inexpensive.

Still, it can be worthwhile in some circumstances. If you work in an injury-prone industry, AD&D can be a useful complement to workers' compensation or long-term disability. Dangerous sports are often excluded from coverage, but each company has its own list of exclusions. If you're a rock climber, pick a company that doesn't exclude that sport.

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