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What is Accidental Death and Dismemberment Insurance?
Accidental Death and dismemberment is an insurance policy that pays the beneficiary on the death of the insured. It also pays for dismemberment related to speech, hearing, and sight. AD&D is a rider that is associated with general insurance policies to cover additional sum assured in case of accidental death of the insured.
The beneficiaries usually get a lump sum amount on the insured's death while in the case of injury, monthly amounts may be allocated. The definitions of accidents are different for different insurers but in most common cases, car crashes, drowning, choking, slippery and machinery accidents, etc.
AD&D – What is Covered and What is Not
AD&D covers deaths due to accidents and accidents might differ from one insurer to another. For example, an act of terrorism is not considered an accident. It is covered under the wartime act that is not included in insurance. Similarly, professional car racing and bungee jumping deaths are not considered accidents too.
AD&D also does not cover critical illnesses such as heart attacks and cancer. There are other insurance options for these though. In case of an accident, the death should not be instant but within a specified period though.
The deaths due to overdose of drugs and medicines, toxic substances, and poison are not covered by AD&D policies. Death caused by illnesses, such as mental illnesses are not covered too.
Death during driving under influence of alcohol is not covered under AD&D. The injuries sustained under the influence of alcohol also go uncovered. Death or injury during a criminal process is barred from AD&D too.
Voluntary AD&D is insurance that pays the beneficiary on the death of the insured like AD&D but it is less expensive. VAD&D may pay the beneficiary the whole amount in one go or may pay the insured's beneficiary in installments.
VAD&D is useful for individuals working in risky situations, such as drivers. The premiums that need to be paid vary depending on the total amount to be paid to the beneficiary. The VAD&D policies have to be revised periodically with renewed items included
Pros of AD&D
Pays for death and dismemberment that are unforeseen.
Offers added income to compensate financial losses.
Costs are low.
Cons of AD&D
Events on which payment is made are limited.
Terminates if the insured leaves the sponsored employer.
Offers a false sense of safety when life insurance is inadequate.
Points to Note
AD&D is a rider to life insurance policies.
Risky situations and voluntary exposure to them are not covered by AD&D.
Although AD&D costs low, they can be a great help in times of need.
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