Life Insurance and Accidental Death and Dismemberment (ADD)

Life insurance is intended to protect your family’s financial well-being if you die. A traditional life insurance policy covers most causes of death, including illness, injury, and accident. However, additional coverage is available to protect you in the event of accidental death or dismemberment. This type of coverage can be added to an existing life insurance policy as a rider, or it can be stand-alone. Accidental Death and Dismemberment (ADD) coverage only pays if the death was due to an accident, or if the insured loses a limb, becomes blind, or is paralyzed in a covered accident.

Living benefits: Although an appropriately designed life insurance policy should adequately compensate your family in the event of your death, accidental death and dismemberment coverage also provides living benefits. If an insured is seriously injured in a covered accident, dismemberment benefits will provide financial benefits for the loss of a hand, arm, foot, or leg. Dismemberment benefits also cover paralysis and blindness. Benefits can vary, but the insured typically qualifies for 50% of the policy’s face amount for the loss of one limb and 100% for the loss of two or more limbs. Additionally, the living benefits do not affect the face value of your policy. Therefore, if you have a $100,000 death benefit, that will not decrease due to the payment of dismemberment benefits.

No medical exam: Accidental death and dismemberment policies only provide benefits if the death or dismemberment is due to an accident. Natural death and death caused by illness are not covered, therefore, factors such as pre-existing conditions, health, weight, and smoking are not a consideration. If certain factors preclude an individual from obtaining traditional life insurance, an ADD policy may be the next best option. However, there are life insurance policies that provide limited coverage without a medical exam. It is important to thoroughly understand your options, and the differences between each, before purchasing insurance coverage.

No waiting period: With no medical exam, and no long application to fill out, an insured is guaranteed same-day approval as long as he or she meets the policy’s age requirements.

Inexpensive: As a limited coverage plan (no coverage for natural death or death caused by illness), the premiums are generally less expensive than full coverage life insurance policies.

Remember, ADD policies only provide coverage if the death was due to an accident. Unfortunately, many insureds are misled into thinking that an ADD policy is a good substitute for traditional life insurance. Accidental coverage is usually only appropriate if an individual is uninsurable because of health conditions or occupation, or if the ADD coverage is added to an existing term life insurance policy. Accidental death can be extremely traumatic to the loved ones left behind, and additional benefits may provide some comfort by affording extra time off work, for example. The dismemberment benefits are also highly valuable in the event that an accident results in loss of limb, blindness, or paralysis. Traditional life insurance coverage simply doesn’t provide the living benefits that ADD coverage does.

For nearly 50 years, Altman & Altman, LLP has been fighting for the rights of accident and injury victims. If you have been injured in an accident as a result of another’s negligence, you may be entitled to compensation for your injuries. Depending on your health, occupation, lifestyle, and financial situation, an Accidental Death and Dismemberment policy may be a valuable tool for protecting your family’s future. The legal team at Altman & Altman, LLP has extensive experience with ADD coverage. If you have questions about whether this type of coverage is right for you, contact us for a free consultation.