An Accidental Death and Dismemberment (AD&D) insurance is an insurance policy covering against accidental death or accidental disability. This insurance will provide a lump sum of money only in case of accidental death. The payout regarding disability from an accident will depend on the level of disability. This is stated in a table listed in the policy conditions. AD&D policy does not apply to death or disability following illness, suicide or any natural causes.
What is an
ACCIDENTAL DEATH AND DISMEMBERMENT
What does it cover?
The purpose of the AD&D insurance is to provide a lump sum of cash to the beneficiary of the policy following the death of the insured person. Or, to provide the same to the policyholder in the event of an accident which causes disablement thereby preventing him from working.
The insurance only covers death or the loss of limbs, loss of fingers, or loss of speech, hearing or sight, resulting from an accident.
How much does it cost?
AD&D depends on your country of residence and the type of work you do. The premium, however, will not necessarily increase with age. Indeed, the risk of an accident is not linked to age, but to external causes. Your living environment will have a far greater influence on the premium. The AD&D premium is quite low compared to term life insurance or critical illness coverage.
Do I need term life insurance and critical illness coverage if I have AD&D?
Though there may be overlaps between your AD&D policy and term life insurance or critical illness coverage, all are needed to provide a good level of protection. Since AD&D will only cover accidental death, term life insurance is needed to cover death by illness or natural cause. By the same logic, critical illness policy will extend AD&D coverage to all natural diseases excluded in the AD&D policy. In case of overlap, like death following an accident, the payout will come from both term life insurance as well as the AD&D policy.