Accidental Death and Dismemberment

Example

“The airline pilot's employment package included a $500,000 accidental death and dismemberment policy to provide extra protection given the occupational risks of flying.”

Memory Tip

Remember 'ADD' - Accidental Death and Dismemberment covers what you would ADD to basic life insurance for accident protection.

Why It Matters

AD&D insurance is typically much cheaper than regular life insurance because it only covers accidental causes, making it an affordable way to increase death benefits. For people in high-risk occupations or those who travel frequently, it provides crucial additional financial protection that standard life insurance policies may not adequately cover.

Common Misconception

People often think AD&D coverage is the same as regular life insurance, but it only pays for accidental deaths and injuries, not deaths from illness, heart attacks, or other natural causes. Many assume it covers all disabilities, when it specifically covers only those resulting from accidents.

In Practice

A construction worker purchases a $100,000 AD&D policy for $15 per month to supplement his $200,000 term life insurance. After losing his right hand in a workplace accident, he receives a partial benefit payment of $50,000 (50% of the full benefit amount as specified in his policy schedule). If he had died in the same accident, his beneficiaries would have received the full $100,000 AD&D benefit plus his $200,000 life insurance payout, totaling $300,000 in coverage.

Etymology

The term emerged in the early 1900s as industrial accidents increased during the Industrial Revolution. 'Dismemberment' comes from Old French 'desmembrer,' meaning to divide limb from limb.

Common Misspellings

Related Terms

More in insurance

Other insurance terms you should know

See Also