A Quick Guide to Understanding Accidental Death and Dismemberment Insurance

Accidental death and dismemberment insurance is usually sold as a rider, or add-on, to a health or life insurance policy. Many employers offer this type of insurance as a benefit to their employees. It is similar to life insurance, but only pays out in certain circumstances.

In addition to providing benefits in the event of death, accidental death and dismemberment insurance also pays out if the covered person incurs certain injuries, such as blindness or the loss of a limb.

Coverage for Accidental Death

The accidental death portion is very similar to life insurance, except that it only pays out if the death is accidental. That includes accidents at work, car accidents, and more.

There is typically a time limit if death is caused by an injury, but the insured party does not die right away. Accidental death insurance does not cover death from disease or old age.

Coverage for Dismemberment

Dismemberment insurance covers specific injuries, such as loss of a limb, total paralysis, or loss of sight or hearing. The payout for dismemberment is a percentage of the coverage for death. The policy will spell out exactly what the coverage is for each type of injury.

Accidental Death and Dismemberment Exclusions

Most accidental death and dismemberment insurance policies contain a list of exclusions. These include things like death by suicide, overdose, or death or injury incurred while committing a crime.

Many policies also exclude war injuries and injuries to professional athletes that happen during a game or competition.

Who Needs Death and Dismemberment Insurance?

If you have a dangerous job, such as working in a factory, in construction, or on a fishing boat, you might want to see if death and dismemberment insurance is an option for you.

And if you’re a bad driver or tend to trip over your own shoelaces, a policy that covers accidental death might not be a bad idea.