Get the Facts on Accidental Death and Dismemberment (AD&D) Insurance

Employee Benefits 101: What You Need to Know about AD&D Insurance Programs

AD&D Insurance Employee Benefits
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As an employee benefits consumer or administrator, you may be wondering what is AD&D insurance and why is this important? Accidental Death and Dismemberment (AD&D) insurance provides coverage to employees and their dependents in the case of an accident that causes catastrophic physical loss or death to an employee. Similar to other types of insurance that cover employees who are killed or injured on the job, this insurance can provide cash benefits for dismemberment (partial or full loss of a hand, foot, leg, or arm) and for partial or total loss of eyesight.

How Accidental Death and Dismemberment Insurance Works

AD&D is generally managed as a rider to traditional life and health insurance policies, and is relatively inexpensive when compared to other insurance programs. In most cases, AD&D payouts are handled through a set of continuous income payments, or to dependents at the rate of double the income of the employee. AD&D employee benefits are not to be confused with workers' compensation, short term or long term disability insurance, or life insurance coverage. 

Many companies that offer AD&D insurance do not employ workers who work in dangerous environments or situations. Having the peace of mind that AD&D insurance provides is a good enough reason to offer this level of coverage, and many employers automatically offer this and pay for it on behalf of their workforce. 

Workplace Deaths Create Need for AD&D 

Prior to the creation of OSHA, the Occupational Safety and Health Administration (OSHA), it was estimated that some 14,000 people died at work or from injuries suffered at work each year.

The numbers have dropped significantly in the history of OSHA, to roughly 12 workplace deaths per day compared to an estimated 38 per day.

Why an AD&D Policy?

Purchasing AD&D insurance through an employer is an excellent idea for workers who work in industries that are dangerous, such as law enforcement, firefighting, aviation, construction, athletics and more.

These professions bring with them a certain amount of risk of severe injury and even death, where workplace safety concerns are high. It is also a good idea for employees to take advantage of this type of insurance if an employer offers it despite working in a safer profession. There is always the risk of suffering an injury or dying while on the job due to an accident, so the extra coverage makes sense.

Average Cost of AD&D Insurance

Based on most recent figures, the average cost of AD&D insurance comes out to about $10 USD per month for a $250,000 policy. There are a range of policy amounts available for those interested in this insurance. For policies that pay more than $250,000, the monthly payment will increase depending on how much insurance is purchased. The monthly premium can be deducted from employee paychecks if the policy is offered through a group benefit plan. 

Not a Replacement Policy for other Employee Benefits

One thing you must understand is that an AD&D policy is should never be considered as a replacement for a traditional life insurance policy, nor does it meet the requirements for minimum health coverage under the Affordable Care Act. The reason for this is that there are major exceptions named in AD&D policies.

Those include the policy not being distributed if the victim was killed during a war, suicide, attempted suicide, driving while intoxicated, taking illegal drugs, a physical or mental illness, and intentional injuries. An AD&D policy supplements the traditional life insurance policy by offering additional coverage for the policyholder. It is recommended for businesses that are in dangerous industries or involve tasks that put employees at risk for serious injury or death. 

Accidental death and dismemberment insurance is an optional insurance policy offered by many employers, and it can also be purchased by anyone who wishes to have this coverage, but their employer does not currently offer it.

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