What is AD&D?

Accidental Death & Dismemberment coverage, most often referred to as AD&D, provides protection in the event that an employee is killed or seriously injured in an accident. Most group plans include AD&D insurance due to it’s low rate. It’s worth noting that the AD&D rate is typically fixed, unlike other pooled benefits it isn’t affected by the demographics of the group.

AD&D Components:

There are many components of the AD&D benefit. The following is not intended to be an exhaustive list, rather these are the most common components:

Volume:

AD&D volume typically matches the life volume for the group plan, so for example if Life is 2x salary then AD&D would be too. Note that in the event that an employee is killed in an accident the AD&D benefit is paid out to the employees designated beneficiary in addition to the life benefit, effectively doubling the amount paid.

A percentage of the AD&D volume may be paid out in the event an employee is dismembered but not killed. The exact percentage and definition of dismemberment is determined by the AD&D contract. In this scenario the benefit is paid directly to the employee.

Termination Age:

Determines the age at which the AD&D coverage ends. This typically matches the Life benefit termination age.

Dismemberment Definitions:

Behind the scenes of an AD&D plan is a list of definitions regarding what is covered and how much is paid. For example, a fraction of the full AD&D volume may be paid out if an employee loses a thumb in an accident, or half may be paid out in the event of losing a limb. There will also be a detailed definition of what constitutes each loss, for example losing an arm may be defined as the removal of the entire arm up to the shoulder joint. Sight, hearing and speech are also typically covered, for example the full AD&D benefit may be paid in the event an employee loses their sight in an accident.

Additional coverage:

AD&D benefits may include additional coverage, for example paying for rehabilitation, repatriation in the event an accident occurs overseas or covering day care costs while an employee is recovering. Home or vehicle alteration costs may also be partially covered. Sometimes this additional coverage is included automatically and other times they are optional extras. It is worth reading the fine print to fully understand what is covered.

Common Exclusions

Due to the required accidental nature of the AD&D benefit there will be clear exclusions as to what is not covered. For example death due to illness, suicide, war injury or natural causes are likely to be exempt under the AD&D benefit. Other exemptions may apply if the employee was under the influence of alcohol or non-prescription drugs when the accident occurred.

AD&D benefits may take longer to pay compared to other benefits such as Life as often investigations will need to be completed before the benefit can be paid. For example an autopsy or police report may be required to determine the cause of the accident.