Adding an incidental death and dismemberment rider to a term life policy is an ideal way for those who need extra protection to get combined and comprehensive coverage.
Accidental death and dismemberment riders are also known as "AD & D Riders" as well as "Multiple Indemnities." Multiple indemnities mean that an insurance company will pay a multiple of the policy's face value. This is the amount that the policy would pay to the beneficiary in the event of the death of the insured person.
One common example of indemnities is double indemnities. This pays an equal amount to the face value of the policy so if the insured person dies in an accident, the beneficiary receives the policy face value and the AD & D Rider face value, which is twice as much as the original amount.
Additional Occurrences Covered by an AD & D Rider
Depending on the rider coverage you choose to add to your term life insurance policy, AD & D Riders may also cover loss of sight or the loss of one or more limbs. Of course, you would have to double check the provisions of your policy as each carrier stipulates specific time frames when payment can be received from the date that your accident occurred. For example, imagine an insured person was in a work accident where a crate fell on the insured person's legs, damaging the limbs enough so that their legs needed to be amputated a few weeks after the accident occurred. Usually the coverage period would depend on the state in which that the policy is drawn, however, a 90 day waiting period after the limbs are amputated is common for this type of rider.
The most important thing to keep in mind is that AD & D Riders do NOT cover death by any form of illegal or crime related activities. This type of rider also does not cover death by suicide or death by a malfunction of the body. An example of "malfunction of the body" would be someone that suffered a stroke or heart attack while driving. If the heart attack or stroke occurred before the accident and the accident was the result of that bodily malfunction, death as a result of the accident would not be covered. Accidental death means that an unforeseen circumstance caused death that is unrelated to the body. The death had to have been unexpected. This is where the term life insurance policy becomes important. While the insured would not benefit from the rider, they would most certainly benefit from the term life insurance policy.
Aside from accidental death, AD & D riders also cover dismemberment. In the case of the accidental loss of one arm or one leg only one half of the death benefit would have paid to the insured. In the event that the insured person suffered the loss of two or more limbs (combination of arms and legs), then that would result in the entire face value (death benefit) being paid to the insured. In this event, the AD & D Rider would be terminated or waived because the entire face value of the death benefit / term life insurance policy would have already been paid out. Most AD & D Riders also include the sudden loss of vision. The same principals apply. If one eye is lost only one half of the benefit is paid out. If both eyes are lost then the insured will receive the whole face value of the death benefit.
AD & D Riders are important to consider adding to term life insurance policies especially if you use your body to earn your livelihood. Make sure to get a term life insurance with rider quote from a few different carriers to ensure the best rate.