Life insurance policy riders are additional supplementary benefits that can sometimes be added onto a life insurance policy contract to enhance coverage. Many come standard and might be able to be included in your policy at no extra charge, while others may require an additional premium.
Having a better understanding of what specific endorsements are and how they work, will help you determine if they are worth adding. In this article, we'll take a closer look at the Accidental Death and Dismemberment life insurance rider (AD&D).
What's an AD&D life insurance rider and how does it work?
AD&D life insurance policy riders can differ from insurer to insurer, and may not be offered on all policy types. However, the basic explanation of an AD&D rider is that if you die as a result of an accident, the life insurance company will double the original death benefit of your policy. For example, if you were to have a $250,000 life insurance policy and were to die as a result of an accident, your policy would pay out $500,000.
What's important to point out is that the wording on an AD&D rider can be very specific when it comes to what qualifies as an accidental death, as well as additional parameters relating to when the death must actually occur after the accident in order for there to be a payout. For example, you may have an accidental injury claim that meets your policy's definition of a qualifying event, but if you were to die after a six month time frame established by your policy, you would not receive the additional benefit. Such exclusions and limitations will vary by insurance company.
In the event you were involved in an accident and lose a limb (leg, foot, arm, hand, fingers), or even your eyesight or hearing, the dismemberment coverage of an AD&D policy rider will pay out the additional benefit while you're still alive. Keep in mind that the dismemberment coverage can also be just as specific when it comes to meeting the policy's definition of a qualifying event, and differ between carriers. For example, some policies state that if the policyholder does not die as a result of the accident and instead loses a limb, he/she will only receive a 50% benefit payout, while losing two or more limbs would result in a full benefit payment.
Be sure to ask your insurance agent to explain all the definitions and specifics under their AD&D rider so you have all the facts.
How can AD&D life insurance be purchased?
AD&D can sometimes be added as a supplementary coverage rider on your existing life insurance policy, or as a stand-alone insurance policy. It is also sometimes offered by credit card companies, lenders, and credit unions.
Why buy an AD&D life insurance policy rider?
Everyone has their own reasons for purchasing an AD&D rider. For some, it can be that you just never know what may happen, and having the additional coverage may be worth the peace of mind and nominal cost.