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November 20, 2019

Accidental Death vs. Disability

accidental death vs disability insurance

When it comes to insurance, there are many options to choose from. However, when it comes to injury, two types of policies you might consider are accidental death and dismemberment and disability insurance.

What is Accidental Death and Dismemberment Insurance?

Accidental death and dismemberment insurance, also known as accidental death or AD&D insurance, offers two types of coverage in the form of one policy – accidental death coverage and dismemberment coverage. This type of policy can pay benefits to the insured or their beneficiaries if they die or suffer a covered injury in an accident. While it covers physical injuries, illnesses are not normally covered by this policy. The specifics of what may or may not be covered will be specific to each policy. It can be purchased through a group plan at work, as an individual policy, or as a rider to your life insurance policy.

Exceptions to an AD&D Insurance Policy

However, there are exceptions in which accidental death and dismemberment policies would not pay out. Even when a death is accidental, normally the death benefit is only paid if the death happens within a certain time frame after the accident, and it can be proven that the death or injury was directly caused as a result of an accident. Also, AD&D insurance typically excludes coverage from accidental injuries or deaths from the following:

  • Bungee jumping
  • Car racing
  • Drinking and driving
  • Drug overdose
  • Skydiving
  • Suicide or attempted suicide
  • Surgery
  • War

Since coverage is unique to each situation and policy, it’s important to reference your personal AD&D policy to know exact details regarding exclusions and eligibility for payment.

Cost of Payouts

Every AD&D policy will have a face amount, but the amount paid for each situation can vary, depending on its seriousness. For instance, you might collect a certain percentage if you were to lose a finger, while collecting a different percentage if you were to lose sight in both eyes. In other cases, such as an injury or death due to accidents from public transportation, the face amount could even double. In order to determine the exact payout, you should review the information listed in your specific policy.

Accidental Death and Dismemberment as Supplemental Insurance

It’s important to remember accidental death and dismemberment is supposed to be a supplement to life and disability insurance, and shouldn’t be considered as a replacement. Hence, coverage amounts are typically low and may come with various restrictions.

What is Disability Insurance?

Disability insurance is a type of insurance that can cover a portion of your salary in the event you are unable to work due to a disability, as defined in your policy. If you recover from the disability, your coverage will end.

Similar to an AD&D insurance policy, you have the option of buying an individual policy, a group plan through your employer or organization, or through employer-sponsored coverage, in which coverage varies for each situation.

What Does Disability Insurance Cover?

Disability insurance often covers back injuries, cancer, heart disease, and other illnesses, ailments, and injuries not caused by an accident. To know the specifics of your coverage, you should reference your personal insurance policy.

What Are the Types of Disability Insurance?

There are several different types of disability insurance. The two main types of disability insurance are short-term and long-term disability.

Short-term disability may help cover a portion of your paycheck for a shorter period of time. A typical amount of time that would be covered is three to six months. Usually, people get this type of insurance through their employer or organization. Policies typically fall into two categories:

  • Own occupation disability insurance:
    This coverage is for those unable to work at their regular occupation, though they still might be able to perform work in another field.
  • Any occupation disability insurance:
    This coverage is for those who are unable to work at any job. While it’s more difficult to claim benefits from, the premium rates are typically less expensive.

On the other hand, long-term disability offers coverage for an extended period of time – from years to decades. It’s sometimes offered by employers; however, the benefit isn’t as common.

Other types of disability insurance include:

  • Business overheard expense disability insurance
  • Mortgage disability insurance
  • Self-insurance insurance
  • State disability insurance
  • Supplemental disability insurance
  • Workers’ compensation insurance

Each one offers different benefits, so it’s important to read about how each type works.

  1. Insurance.com, Disability Insurance: Learn Why You Need It, 2018
  2. Nerdwallet.com, Accidental Death and Dismemberment Insurance Explained, 2016
  3. Nerdwallet.com, Disability Insurance: Why You Need It and How to Get It, 2017
  4. Nerdwallet.com, Term Life Insurance vs. Accidental Death & Dismemberment, 2017
  5. Policygenius.com, Accidental Death and Dismemberment Insurance, 2018
  6. https://www.verywellhealth.com/who-has-access-to-your-medical-records-2615502, January 22, 2019

Categories: Accident Insurance, Supplemental Health Insurance

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