Accidental death and dismemberment insurance is an important type of insurance coverage for international employees, travelers, and expatriates. Let’s first read Sara’s story to discover more about accidental death & dismemberment insurance, or AD&D.
Sara was a bright, talented young woman with a vibrant spirit. During her junior year at Georgetown University, she decided to join 50 fellow students on a study abroad program in India. On one day of her trip, she boarded a bus that crashed and overturned before it reached its destination. Sadly, Sara and three other students, along with three adults, did not survive the crash.
You’ve seen the headlines:
“Former MLB pitcher dies in accidental fall”
“Father dies saving 6-year-old daughter from rip-tide”
“Couple fall to their death at iconic photo spot”
Unfortunately, accidents do happen. In fact, they are the third leading cause of death in the U.S. and the number one cause of death for adults ages 25 to 44. Accidents happen outside the U.S., often at higher rates. Generally, developing countries – even those that are home to vacation hot spots – have road fatality rates that are much higher than the worldwide average.
Living or traveling overseas can be an exciting adventure, but there are also risks. Accidental Death & Dismemberment (AD&D) Insurance can protect your loved ones financially if the unthinkable happens.
Although it’s an important part of an overseas travel insurance portfolio, many people don’t fully understand it. This article offers a clear explanation of AD&D insurance and answers commonly asked questions about this uncomfortable topic, which could save your family from financial ruin.
What is Accidental Death & Dismemberment Insurance (AD&D)?
AD&D insurance protects your family if you die or become dismembered due to an accident. In the event of your death, it will pay your beneficiaries a lump sum payment. If you experience a qualifying dismemberment, it will pay a determined amount based on the severity of your injuries.
What is considered an accidental death?
An accidental death is generally where an external and visible means causes a sudden, unintentional, and unexpected occurrence that results in your death. Examples of accidents include:
traffic accident heavy equipment accident drowning
boating accident being crushed by something choking
plane crash exposure to the elements poisoning
accidental fall dying in a fire murder
The death must occur within a certain number of days following your injury (could be 1 month or up to 1 year, depending on the policy).
What is not considered an accident?
Accidents are situations beyond your control, so if you are responsible for the circumstance, it is not considered an accident.
Long-term ailments or sudden medical events are not considered accidents either. If an illness or disease contributes to your death or dismemberment, it will not be considered a covered accident.
Suppose you have a health disorder, such as an epileptic seizure, that causes you to crash your car. Should you die from that accident, you would probably not be covered by your AD&D insurance. This is because your illness caused you to crash.
The following instances are generally not considered accidental deaths:
- Death from an illness, such as cancer, diabetes, hernia, or bacterial infections
- Death from a heart attack, unless precipitated by the accident. If a heart attack causes you to have an accident, it may not be covered by insurance.
- Death during surgery
- Death or injury while driving under the influence of alcohol
- A drug overdose
- Suicide, or anything that happens as the result of mental illness
- War and military injuries or death
- Death or injury from playing professional sports
- Death or injury from car racing, flying a plane, skydiving, or other high-risk activity
- Death or injury while you are committing a crime
- Death or injury from voluntarily inhaling gas or taking poison
- Death or injury while participating in a riot or civil disturbance
What is dismemberment?
For insurance purposes, dismemberment occurs when someone loses a limb or suffers a complete sensory loss because of an accident. A limb can be an arm (above the wrist), a leg (above the ankle), hand, foot, or possibly a finger or toe. Sensory loss is generally vision, speech, or hearing. Partial or permanent paralysis is often considered a form of dismemberment also.
AD&D insurance will pay you a certain amount if you survive an accident but experience a qualifying dismemberment. The costs associated with losing a limb can be quite high. In addition to the immediate hospital expenses, you may have to cover physical therapy, a prosthetic and income while you’re out of work.
Payouts for dismemberment are typically listed as a percentage of the policy’s death benefit. The most common payout structure is 50% if you lose one limb or eye and 100% if you lose multiple body parts. The payout might be lower, such as 25%, if you lose a finger or toe.
Although accidental death and dismemberment insurance is very helpful if you are dismembered in an accident, it should not be considered a replacement for disability insurance. Disability insurance provides replacement income in the event you are unable to continue working.
What are the advantages of AD&D insurance?
No medical exam: AD&D insurance won’t require you to take a medical exam or answer questions about your health. There is also no waiting period before the coverage will take effect. This can be appealing to people with pre-existing conditions that make it difficult to find affordable life insurance. However, there is a difference between AD&D insurance and traditional life insurance, and this is explained further below.
You won’t be denied coverage: You won’t be denied coverage for AD&D insurance because of your health. You just need to meet the age requirement, which is typically between age 18 and 70.
You can get coverage quickly: Since there are no medical exams, lengthy questionnaires, or waiting periods, you can usually get approved for an AD&D policy within days or even minutes.
Replaces a portion of loss of income: Accidents are the third leading cause of death in the United States. An accidental death not only impacts the surviving loved ones emotionally but also financially as they now deal with the sudden loss of income. The death benefit from an AD&D policy can add peace of mind by lessening that burden.
Low cost: Because coverage is limited to certain events causing accidental death or loss of limb, premiums are lower than traditional life insurance policies.
What are the disadvantages of AD&D insurance?
Coverage applies to accidents only: AD&D insurance provides a payout only if you’re killed or seriously injured in an accident. Other causes of death, such as chronic illness or cancer, are not covered. It’s more likely for someone to die of health problems than from an accident. If your cause of death is not determined to be an accident, your beneficiaries won’t receive any money. Also, the death benefit is paid only if you pass away within a specified period of time after the accident.
Should be excluded from life insurance needs: Since it only pays upon certain events, an AD&D policy should not be included when determining if someone has adequate life insurance. A person should make sure their traditional life insurance is adequate to provide financial support to the beneficiaries. An AD&D supplement should serve only as an extra benefit for the sudden and unexpected death of the insured.
You might lose coverage if you leave your job: Most people have their AD&D insurance through their employer. Most of these employer AD&D policies are not portable, so you cannot take them with you when you leave your job, and your coverage will end.
Coverage is not as cheap as it seems: accidental death and dismemberment insurance only covers accidents and doesn’t cover the other causes of death or serious injury. Since the insurance carrier is less likely to pay an AD&D claim than a traditional life insurance claim, they can charge a lower premium for AD&D insurance because the chance of payout is relatively low. However, the insured AD&D customer is also receiving less insurance protection, so their coverage may not be as inexpensive as it seems.
Benefit reduction schedule: Some AD&D policies include a benefit reduction based on age. Consequently, your benefits may be reduced as you reach certain ages.
Who needs AD&D insurance the most?
The people who need AD&D insurance the most are people at a higher risk of accidental death, people who live or travel overseas, and those who are unable to get traditional life insurance coverage due to underlying health conditions.
People who are at higher risk of accidental death include younger people (accidents are leading cause of death), people who work in a high-risk job, and people who participate in high-risk recreational activities, such as skydiving or scuba diving.
Domestic AD&D insurance policies typically do not provide coverage when you live or travel overseas. Consequently, expats and international travelers purchase their own AD&D policy, usually as part of a comprehensive international travel insurance plan.
Is there an age limit to qualify for AD&D insurance?
Although there may be exceptions, most insurance carriers will not provide AD&D coverage to people who are over 70 years old.
What is the difference between AD&D and life insurance?
Traditional life insurance provides a payout for nearly any cause of death (excluding suicide), while AD&D insurance only pays a death benefit if the death is caused by an accident. Since AD&D insurance limits payouts to accidents, its premiums are lower and it should not be considered a replacement for traditional life insurance.
However, unlike traditional life insurance, AD&D insurance pays a benefit for non-fatal injuries that result in the loss of a limb, a sensory loss, or paralysis.
Do I need both life insurance and accidental death & dismeberment insurance?
If you are unable to get adequate coverage from a traditional life insurance policy, you may want to consider purchasing an AD&D insurance plan to provide some additional coverage. However, if your traditional life insurance policy provides you with adequate coverage, AD&D insurance may not be necessary.
The reason you might want to carry Accidental Death & Dismemberment insurance in addition to an adequate amount of life insurance is if you are at a higher risk of death or serious injury. If you are younger, you are at a greater risk of dying from an accident than from other causes. If you work in a high-risk job or participate in high-risk recreational activities, you are more likely to be involved in an accident.
What is Voluntary AD&D insurance?
Voluntary AD&D insurance is an optional benefit offered by some employers to their employees to purchase additional AD&D insurance to protect themselves, their spouse, or their children. It’s typically added as a rider to a life insurance or health insurance policy, to supplement a traditional life insurance policy.
Voluntary AD&D insurance is particularly popular with people who work in more dangerous jobs. It provides broader coverage than workers’ compensation, covering accidents that happen anywhere, while workers’ compensation is limited to accidents at work.
Does accidental death & dismemberment insurance include repatriation of remains?
A repatriation of remains benefit will pay to transport your body by plane or ground transportation to your home country if your insurance covers the injury or illness that caused your death. It also covers the cost of preparing your body for transport. This can save a lot of money because repatriation can cost several thousand dollars. And your family may already have to prepare and pay for funeral arrangements in their time of grief.
The AD&D benefit included in many travel insurance policies does not cover the cost of returning your body to your home country for proper burial or cremation. This is an important benefit, so you should make sure to buy a travel health insurance policy that includes it.
Are there any AD&D benefits available that are particular to travel?
Many insurers pay a higher death benefit if you die while you are a fare-paying passenger in a common carrier, such as a commercial airplane, train, bus, taxi, ferry or cruise ship.
Here are a few of the optional AD&D benefits that are specific to travel:
Flight Accident AD&D: This type of coverage is specific to air travel. Coverage is provided if death or injury is sustained while boarding, riding on, and exiting an aircraft. Coverage may also include being struck by or run down by an aircraft. Flight Accident AD&D benefits will not apply if injury or death occurs during the non-flight portion of your trip.
Common Carrier: This type of policy is geared to general travel. You will have coverage for incidents that might occur while you are away, whether it be traveling on an airplane, train, or cruise ship.
24-hour AD&D: This is the most comprehensive form of AD&D coverage. The 24-hour plan offers coverage for your entire trip, from the time you leave on your scheduled trip until the time you return home. The 24-hour coverage plan allows for you to be covered at all time for travel accidents that lead to permanent disability or death.
What other optional AD&D benefits are typically available?
Some insurers offer optional benefits as part of an enhanced AD&D plan, including benefits for:
- Accelerated death
- Adaptive home and vehicle
- Bereavement counseling
- Common carrier additional payout
- Common disaster
- Critical burn
- Funeral expense
- Higher education payments for children
- HIV occupational accident
- Hospital stay
- Loss of use
- Permanent total disability
- Surviving spouse legal or financial services
- Wearing seat belt benefit
Where can I purchase Accidental Death & Dismemberment Insurance?
Most companies offer AD&D insurance as part of the benefits package in the United States, however, these plans don’t generally cover international accidents. If you work for a U.S. company, you may receive some level of AD&D insurance at no cost to you.
For international AD&D insurance, you can purchase a plan for yourself as an individual, or an employer group that has employees working overseas. Often, an AD&D policy is added at little or no cost to an international term life insurance policy that can additionally cover things that may not be included in a simple AD&D policy.
Good Neighbor Insurance specializes in assisting global citizens to get the international protection they need- in fact, we’ve been protecting international groups and individuals for over 25 years. If you’re looking to protect yourself, your family, or your group overseas, we’ve got you covered. Fill out our simple quote form here and one of our expert international insurance advisors will reach out to you to get you the protection you need.
As a side note, you might be interested to know that Sara’s parents channeled their grief into the creation of Sara’s Wish Foundation, dedicated to improving safety in travel, especially in study-abroad programs. Her father, a college faculty member, reached out to the engineering department at his college about designing a portable seat belt that could potentially save the lives of global travelers. Seven design teams competed for the best design, and one was chosen. A new lightweight, portable seat belt is now in the process of becoming reality.