Agent Owner, Gilmore Insurance Services, Marysville, Washington State
Accidental death and dismemberment is conditional coverage. In other words in order to pay out, things have to happen a certain way. First, death from natural causes do not cause payout. Second, death from an accident has to occur within a certain time window. A person injured in a car accident holds on for 91 days before passing. Unfortunately, the policy died the day before as it had a 90 window for payment occur. The reason AD&D is inexpensive to purchase is the probability of payout is low.
Regular life insurance pay upon death by accident or natural causes.
President, The Firm of Steven H. Kobrin, LUTCF, 6-05 Saddle River Rd #103, Fair Lawn, NJ 07410
Well, actually, they are both life insurance.
Accidental death and dismemberment coverage will pay only when the cause of death is by accident. (The dismemberment clause means that money is payable if a certain number of limbs are disabled.)
What you and I typically call “life insurance” is a policy that will pay a benefit whether the cause of death is accident or illness.
Wouldn’t it make sense that people buy life insurance and not AD&D? After all, nobody knows how they’re going to die.
True, but AD&D has a role to play.
Sometimes, people are unfortunately not insurable for typical life insurance. They simply have too many serious uncontrolled medical conditions. So they should buy accident-only coverage. I mean, car accidents, plane crashes, falls off roofs, etc. can happen to anybody.
But here things get tricky.
What happens if somebody has a heart attack while their plane is tragically falling from the sky? Dilemmas such as these are why medical examiners and forensic specialists earn their pay.
An Accidental Death and Dismemberment policy is a life insurance product. It can come in two different forms. There are term and permanent life insurance policies that offer AD&D as a rider to the life insurance to increase the face amount proceeds in case of accidental death. The dismemberment pays on a schedule depending on the limbs effected.
There are also AD&D standalone policies that only cover an accidental death or dismemberment. The plus side of these polices usually require little or no underwriting which gives ill people an opportunity to have some life insurance coverage were as they may not qualify for any other type of life insurance. They are also very affordable premiums. The downside is the odds of dying accidental versus dying from an illness are very very high. This is why they are easy and cheap, because the odds are in the life insurance companies favor not to pay a claim.
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Regular life insurance pay upon death by accident or natural causes.
Accidental death and dismemberment coverage will pay only when the cause of death is by accident. (The dismemberment clause means that money is payable if a certain number of limbs are disabled.)
What you and I typically call “life insurance” is a policy that will pay a benefit whether the cause of death is accident or illness.
Wouldn’t it make sense that people buy life insurance and not AD&D? After all, nobody knows how they’re going to die.
True, but AD&D has a role to play.
Sometimes, people are unfortunately not insurable for typical life insurance. They simply have too many serious uncontrolled medical conditions. So they should buy accident-only coverage. I mean, car accidents, plane crashes, falls off roofs, etc. can happen to anybody.
But here things get tricky.
What happens if somebody has a heart attack while their plane is tragically falling from the sky? Dilemmas such as these are why medical examiners and forensic specialists earn their pay.
There are also AD&D standalone policies that only cover an accidental death or dismemberment. The plus side of these polices usually require little or no underwriting which gives ill people an opportunity to have some life insurance coverage were as they may not qualify for any other type of life insurance. They are also very affordable premiums. The downside is the odds of dying accidental versus dying from an illness are very very high. This is why they are easy and cheap, because the odds are in the life insurance companies favor not to pay a claim.