By offering ancillary insurance like accidental death and dismemberment (AD&D) insurance to their benefits packages, employers can provide more comprehensive health coverage to their employees.
AD&D is typically added as a rider to health insurance or life insurance policies. This type of insurance covers the unintentional death or dismemberment of insured employees. This can be a relatively low-cost way to protect your employees and their families.
Here’s what you need to know about accidental death and dismemberment insurance.
What is Accidental Death and Dismemberment Insurance?
Accidental death and dismemberment insurance is a type of ancillary insurance that pays benefits in the case of a person’s accidental death or dismemberment. This also includes the loss of certain bodily functions like hearing, eyesight, or speech.
AD&D is known as a double indemnity rider, meaning that the beneficiaries receive benefits from the AD&D policy as well as the life insurance policy that it is attached to if the insured dies accidentally. Most accidental death and dismemberment insurance policies mirror the value of the original life insurance policy.
While AD&D covers unexpected and accidental deaths, it typically does not pay benefits if the insured dies due to natural causes, like a heart attack or cancer.
AD&D insurance also covers dismemberment, loss of functions, and partial or permanent paralysis. In these cases, the policy will usually pay a percentage of its full benefit amount. The specific amount paid for certain injuries depends on the policy, making it important for policyholders to carefully review their policies to understand what is and isn’t covered.
What Is the Difference Between Life Insurance and Accidental Death and Dismemberment Insurance?
While life insurance and AD&D insurance may seem similar, there are a few key differences that separate the two.
Life insurance offers broader coverage than AD&D insurance. With the latter, beneficiaries only receive benefits if the insured dies or loses a limb due to a covered accident. Life insurance, on the other hand, provides death benefits to beneficiaries regardless of the cause of death (some exceptions may apply depending on the policy).
Who Needs AD&D Insurance?
Accidental death and dismemberment insurance is a very affordable ancillary benefit that provides added protection to employees, making it an important consideration for any business that wants to put together a competitive benefits package.
AD&D insurance is particularly beneficial for employees that work in high-risk environments, such as factory workers or construction workers that operate dangerous equipment. Due to the increased physical risk in industries like these, AD&D insurance can offer peace of mind to employees in these fields.
Is AD&D Insurance a Voluntary Benefit?
AD&D insurance is typically offered as a voluntary benefit. This means that the insurance is an optional protection plan that employees can choose to pay for.
With voluntary benefits, employees pay 51% to 100% of the benefit premiums, and the employer pays the remaining 0% to 49%. While AD&D insurance is often added as a rider to life insurance, employees can often purchase voluntary AD&D insurance as standalone coverage without enrolling in life insurance.
While accidental death and dismemberment insurance is often offered as a voluntary benefit, it can also be an employer-contributory benefit, meaning the employer pays for most or all of the monthly premiums. This helps employees get access to coverage while minimizing their costs.
Advantages of AD&D Insurance
The primary advantage of AD&D insurance is that it provides peace of mind and protection to employees and their families by supporting beneficiaries financially if an employee loses their life due to an accident. AD&D policies provide a death benefit in addition to the death benefit provided by traditional life insurance, helping to support the deceased’s family members.
How Much Does AD&D Insurance Cost?
Compared to traditional term life insurance and whole life insurance, AD&D insurance is very affordable. When purchased through their employers, employees may pay as little as a few dollars per month for this coverage.
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Accidental death and dismemberment insurance is a valuable ancillary benefit that can provide peace of mind and financial support to employees and their family members if an employee loses a limb or dies due to a covered accident.
At KSA Insurance, we work with employers in South Carolina and across the southeastern United States to help them choose affordable ancillary benefits and insurance policies that protect their employees against a variety of common risks.
Contact us today to get a quote and learn more about ancillary benefits for employers.