New BusinessBENEFITS

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  • Accidental Death & Dismemberment
    Game Plan

    AD&D Covers Loss of Limbs or Vital Functions

    The “dismemberment” in AD&D insurance refers to the types of injuries that qualify for coverage.

    Generally, a policy will pay the beneficiary one-half of the value of the policy for each covered injury, which includes parts of the body and vital physical functions. For example, if an employee lost the sight in one eye, or lost a hand or a foot, he or she would receive 50% of the policy’s coverage. But if he or she lost both hands or the sight in both eyes, the policyholder would be entitled to receive the full coverage amount of the policy.

    All covered losses in an AD&D policy are set out in a policy’s schedule. These will include specifications for each injury, including paraplegia (likely a percentage of the coverage amount) versus quadriplegia (the full policy amount); loss of speech or hearing (generally one-half the coverage amount); loss of fingers (dependent on the policy); and so on. Most policies define the percentage of payout for these losses following an industry-accepted standard.

    On-the-job injuries

    AD&D is generally viewed as a way to cover gaps that other policies might miss. For example, if an employee has a covered accidental injury at your workplace, they’d be eligible under workers’ compensation to get treatment for that injury; AD&D would pay out a lump sum to help the employee navigate the financial pitfalls of missing work—perhaps permanently—due to a serious physical loss.

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    Game Plan

    Accident-caused severe physical losses are relatively uncommon; policies like health, disability, and workers’ compensation provide much broader, more inclusive coverages than AD&D. You should look at employee benefits from a comprehensive perspective, and see how AD&D might serve to complement other policies you offer your employees—and fill in coverage gaps. Among your best resources on understanding the big benefits picture—and the fine print—will be your HR specialist and insurance professional.