What Is Accidental Death and Dismemberment Insurance?

What Is Accidental Death and Dismemberment Insurance?

Accidental death and dismemberment insurance refers to insurance policies that pay benefits in the event of a policyholder's death or dismemberment due to an accident, explains Insurance.com. Policyholders can purchase accidental death and dismemberment insurance as separate policies or as riders on their health or life insurance policies.

Accidental death and dismemberment policies and riders are usually very specific about what they do and do not cover, as Insurance.com explains. Typically, insurance providers only honor a claim if the policyholder's death or injuries result directly from an accident and nothing else, according to Insure.com, and most insurance companies also specify that the death must occur within a certain time after the accident for the beneficiaries to collect benefits.

For dismemberment, policyholders qualify for 100 percent of the insurance benefits if they lose both limbs or eyes due to an accident, notes Investopedia. Different payment schedules apply for partial dismemberment, such as the loss of one limb or loss of sight in one eye.

Coverage amounts may also vary for partial or complete paralysis, according to Insurance.com. Additionally, policies typically do not cover death due to surgery or drug overdoses, states Insurance.com. Most policies also exclude death due to risky activities, such as skydiving, car racing and war.

Companies have different rules concerning the events included or excluded in their coverage, states Insure.com. Accordingly, consumers should research them properly before choosing a company.