How to Insure Your Income: AD&D

Accidental death policies or riders include a death benefit, which is payable in the event of death resulting from accidental bodily injury. A companion coverage is provided for loss of limbs or sight, often called dismemberment coverage.

When you buy this additional coverage, your insurance company will attach a schedule, which lists various dismemberments and losses of sight for which specified sums will be paid. In policies with weekly disability income benefits, the sum payable usually is expressed as a multiple of the weekly indemnity. In policies without weekly disability income benefits, the sums payable usually are expressed as percentages of the death benefit limit, or sometimes as percentages of a limit in the policy known as the principal or capital sum.

The intent of the dismemberment feature is to provide you with a lump sum that will help you through a period of rehabilitation or training for other work.

Most company policies provide that, even if you are not disabled after an accident, if a loss of limb or sight occurs within 90 days of the date of the accident, the sums in the schedule will be paid.

Accidental death and dismemberment coverage provides both a life insurance and a health insurance benefit. However, the life insurance benefit applies only to accidental death and is not paid for death by natural causes.