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What You Should Know About Accidental Death Coverage

What You Should Know About Accidental Death Coverage

Accidental death insurance, also known as accidental death and dismemberment insurance (AD&D), is usually sold as a rider to a plan for members who want extra protection for their family in case they are killed as a result of an accident.

According to the 2005 National Vital Statistics Report, accidents are one of the most common forms of death, and as such, if death comes so suddenly and unexpectedly, many people feel like they should be entitled to extra money for their loved ones to help deal with the shock. In addition, AD&D insurance provides benefits in case of accidental dismemberment which does not result in a loss of life.

These are the basic considerations of AD&D policies:

  • They are inexpensive: Compared to life insurance plans, AD&D coverage can be extremely inexpensive and affordable. Some plans start for as little as $5.00 per month for basic coverage and, when added as a rider to a policy, can be paid for quite easily without any significant increase in premium. The bonus is that you can enjoy the peace of mind that comes with the added protection for the policy.
  • They can be large: AD&D policies, like life insurance policies, can provide many levels of coverage. Policy limits range anywhere from ten thousand dollars to twenty million dollars. Obviously, the higher your benefit amount is, the more expensive your monthly premiums for this coverage will be as well. If purchased separately from life insurance, most people follow the 10 times rule; buying enough coverage to equal 10 times what their annual salary amount is. Purchased as a part of a life insurance policy, the limits tend to be significantly smaller, allowing the life portion to handle the bulk of the payment amount.
  • There is no examination required usually: One of the most attractive features to AD&D is that there is no medical examination required before issuing it. This is because the type of death that this plan covers is not going to be found through a medical exam, such as with life insurance.
  • Dismemberment comes at various levels: If you have an AD&D policy and suffer accidental dismemberment, how much you will receive is based on what you lose. Payment amounts are different for losing a foot, a leg, an arm, or the use of your eyes. Check your policy for specifics on which payments will be made for losses due to dismemberment.
  • Rates do not increase with age: Again, this benefit of an AD&D policy over your standard life policy is due to the nature of how the benefits are paid, if any. Fatal accidents do not tend to happen more frequently to people the older they get (in fact, they tend to happen less, but don’t expect your premiums to decrease as a result). Thus, once you land an AD&D policy for a specific amount, you can be sure that you will pay that same amount for as long as you have the policy.
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