Accident life insurance also known as "accidental death" insurance, or "accidental death and dismemberment" insurance (which is partly also health/disability insurance), it is types of life and health insurances coverage in case of the insured suddenly death or injure caused by accident.
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Basics of Accidental Death and Dismemberment Policies
Optional supplementary benefits add tremendous value to life policies. The most common additional benefit offered with those is the Accidental Death and Dismemberment (AD&D) rider. This rider embodies two factions:
1) Accidental Death
2) Dismemberment
The Accidental Death (AD) rider
For a minimal additional premium payment, the insurer would pay an additional amount (up to twice the sum assured) to the estate of the insured. The provision here is that the death of the insured must be accidental. Accidental death is defined as death caused by accidental bodily injury. It would not include death by suicide and exclusions would occur if the death was caused by dangerous activities not disclosed on the application.
Dismemberment
This covers permanent disability that results from accidental bodily injury as well. Self-inflicted loss of limbs or sight is typically excluded from this benefit. The insurer will define in the permanent disability covered in the policy document. The insurer would usually pay a percentage of the sum assured depending on the severity of the dismemberment and according to the scale of benefits. It is important to fully understand the terms of dismemberment since those are explicitly stated and legally binding. In one case, there is an insurer that only provides compensation if hands or feet are completely severed or if eyesight is completely lost.
Generally, AD&D contains a clause that states that the insurer will not be liable for both accidental death benefits and dismemberment benefits where losses occur in the same accident. A dismemberment claim would usually discontinue the rider once the claim is settled subject to the insurer's discretion.
In some cases, the AD&D rider is offered alongside an AD rider. The easy choice would be the AD&D rider, since this is more comprehensive and it not usually much more expensive. Accidental death and dismemberment riders are also available on term insurance plans. These riders are important in insuring against disability.
Other life insurance provisions that cover disability include: waiver of charges (or premium), disability income benefit and the critical illness benefit. In cases where the critical illness benefit includes dismemberment provisions, it is unnecessary to take the AD&D rider. Such cases would require the accidental death rider alone. This provision enhances the value of life and health insurance tremendously. With life insurance, it might also be useful to utilize the income disability option in addition to this optional supplementary benefit. This is why some financial planners regard a good life insurance policy as a complete investment.
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