What You Need to Know About Accidental Death & Dismemberment Insurance
By: Benefits by Design | Tuesday August 13, 2019Updated : Thursday August 6, 2020
Accidental Death & Dismemberment Insurance (AD&D) is an employee benefit that doesn’t get much profile. That’s not because it’s not a great benefit—it’s because it’s almost always paired with Life Insurance.
Like good wine and cheese, Life Insurance and AD&D pair well together. They fill in the gaps in coverage and, when combined, create a more comprehensive insurance plan in the case of an accident or loss of life.
What is Accidental Death and Dismemberment Insurance?
Accidental Death and Dismemberment Insurance (AD&D) provides financial assistance and support for covered employees in the event of bodily harm or loss of life as the result of an accident. AD&D is sometimes referred to as “catastrophic insurance” or “catastrophic coverage” because it covers major accidental injuries.
What does Accidental Death & Dismemberment cover?
Specific coverage and policy wording varies between carriers. Generally speaking, AD&D provides coverage for:
- Loss of limb
- Loss of hands, feet, fingers or toes
- Total or partial paralysis
- Loss of sight or hearing
- Loss of life
Additionally, AD&D provides other support and financial assistance beyond the above. For example, our AD&D benefit, provided through Industrial Alliance (iA Financial Group), includes*:
- Funeral Expense Benefit. If an injury results in loss of life, an additional amount is payable for funeral expenses incurred, up to a set maximum.
- Rehabilitation Benefit. If an injury requires special training to qualify for a special occupation, the reasonable and necessary expense incurred for such training will be paid, up to a set maximum.
- Bereavement Benefit. If an injury results in loss of life, this benefit provides six sessions of grief counselling for the Spouse and/or Dependent Children, up to a set maximum.
*Benefits and maximums are subject to change.
How much does Accidental Death & Dismemberment Insurance cost?
Due to the low risk of a claim and the varying payable amounts, AD&D is an inexpensive benefit. The affordability of AD&D makes it easy to add-on to the Life Insurance benefit to provide additional security and peace of mind.
The monthly premiums paid are based on the total volume payable under the Life Insurance rate.
What happens if I lose a body part?
It’s a bit morbid, but it is a common question. The amount of coverage will vary by carrier. The table below shows what percentage of the benefit is paid following an accident for our AD&D benefit:
|Type of Loss||Amount|
|Total paralysis of both lower limbs, one side of the body, or all four limbs||200% of principal sum amount|
|Loss of life, eyesight in both eyes, or both hands or both feet||100% of the principal sum amount|
|Loss of one hand or one foot, speech, eyesight in one eye, or hearing in both ears||75% of principal sum amount|
|Loss of use of one hand, foot, arm, or leg||75% of principal sum amount|
|Loss of hearing in one ear||25% of principal sum amount|
We know people want to understand their coverage, and sometimes that means putting a price on things you’d rather not put a price on. Just don’t do what these folks did (warning – pretty crazy, yet strangely fascinating read).
**Subject to change.
I already have Life Insurance, why do I need AD&D Coverage?
Life Insurance provides financial assistance in the event of a loss of life. AD&D provides financial assistance for bodily harm, which can severely impact your life and ability to work.
AD&D Insurance supplements Life Insurance nicely, and because the two often work from the same principal amount, it just makes sense to take both. Pair that with its significantly low cost, and you may find yourself asking, “Well, why wouldn’t I add it?”
What happens if I pass away and have both Life Insurance and AD&D?
In cases where death is accidental, each benefit would be payable. Since Life and AD&D Insurance are often quoted together, and with the same principal amount, the total amount payable is easy to determine.
Are all industries and occupations eligible for Accidental Death & Dismemberment Insurance?
Coverage varies by insurance company, but our Accidental Death & Dismemberment (AD&D) benefit is available to all.
However, those in some industries are subject to an increased rate, based on risk.