26.3 Accidental Death and Dismemberment (AD&D)
Key Takeaways
- AD&D pays only for accidental death or specific losses, not illness.
- Benefits follow a schedule of losses (capital sum) with partial payouts.
- Coverage can be individual, group, or attached as a rider to life insurance.
- Common exclusions include sickness, war, suicide, and hazardous activities.
- AD&D is not a substitute for life insurance due to limited causes of loss.
- Double indemnity riders often provide AD&D benefits within life policies.
Accidental Death and Dismemberment (AD&D) insurance provides benefits if the insured dies or suffers specific serious injuries due to an accident. AD&D is often offered as a rider to life insurance or as a standalone voluntary benefit.
How AD&D Works
AD&D pays benefits only for losses caused by accidents, not illness or natural causes. The policy defines what qualifies as a covered accident and specifies payment amounts for various losses.
Key Benefit Terms
| Term | Definition |
|---|---|
| Principal Sum | Full benefit paid for accidental death or most severe losses (e.g., loss of two limbs) |
| Capital Sum | Benefit paid for specific losses (often a percentage of principal sum) |
| Covered Accident | An unintended, unforeseen event that directly causes injury or death |
Schedule of Benefits (Capital Sum)
AD&D policies include a schedule of benefits that specifies the percentage of the principal sum paid for each type of loss:
| Loss | Typical Benefit |
|---|---|
| Loss of Life | 100% of Principal Sum |
| Loss of Both Hands or Both Feet | 100% of Principal Sum |
| Loss of Sight in Both Eyes | 100% of Principal Sum |
| Loss of One Hand and One Foot | 100% of Principal Sum |
| Loss of One Hand/Foot and Sight in One Eye | 100% of Principal Sum |
| Loss of Speech and Hearing | 100% of Principal Sum |
| Loss of One Hand or One Foot | 50% of Principal Sum |
| Loss of Sight in One Eye | 50% of Principal Sum |
| Loss of Speech or Hearing | 50% of Principal Sum |
| Loss of Thumb and Index Finger (same hand) | 25% of Principal Sum |
Definition of Loss: "Loss" typically means complete severance (amputation) or total, irrecoverable loss of function.
Types of AD&D Coverage
Voluntary AD&D
- Purchased by individuals or offered as optional workplace benefit
- Premiums typically low ($5-$20/month for $100,000+ coverage)
- Can be portable (continue coverage after leaving employer)
Group AD&D
- Employer-sponsored coverage
- Often included as part of group life insurance
- Coverage typically 1-3x annual salary
Travel Accident Insurance
- Covers accidental death/dismemberment while traveling
- May be included in credit cards or purchased separately
- Common coverage: airplane accidents, travel-related accidents
Common AD&D Exclusions
AD&D policies do NOT pay for losses caused by:
| Exclusion | Example |
|---|---|
| Illness or Disease | Heart attack, stroke, cancer |
| Suicide or Self-Inflicted Injury | Intentional self-harm |
| War or Military Action | Combat injuries |
| Participation in a Crime | Injury while committing a felony |
| Intoxication | Accidents while legally intoxicated |
| Drug Use | Accidents while under influence of non-prescribed drugs |
| High-Risk Activities | Skydiving, bungee jumping (unless covered by rider) |
| Pre-Existing Conditions | Injuries related to prior conditions |
AD&D vs. Life Insurance
| Feature | AD&D | Life Insurance |
|---|---|---|
| Death Benefit | Accidental death only | Any cause of death |
| Dismemberment Benefit | Yes | No |
| Premium Cost | Much lower | Higher |
| Underwriting | Minimal or none | Medical underwriting |
| Claim Frequency | Low (most deaths aren't accidental) | Higher |
Exam Tip: AD&D should supplement life insurance, not replace it. Only about 5-6% of deaths are accidental, so most people will never collect AD&D benefits.
Common Riders
| Rider | Description |
|---|---|
| Seatbelt/Airbag | Additional benefit if wearing seatbelt or airbag deploys |
| Common Carrier | Additional benefit for accidents on planes, trains, buses |
| Education Benefit | Pays for dependent children's education if insured dies |
| Exposure/Disappearance | Covers death from exposure or if body never found |
| Coma Benefit | Monthly payments if accident causes extended coma |
| Rehabilitation Benefit | Covers rehab/retraining after dismemberment |
Key Takeaways
- AD&D pays only for accidental death or specific losses, not illness.
- Benefits follow a schedule of losses (capital sum) with partial payouts.
- Coverage can be individual, group, or attached as a rider to life insurance.
- Common exclusions include sickness, war, suicide, and hazardous activities.
- AD&D is not a substitute for life insurance due to limited causes of loss.
- Double indemnity riders often provide AD&D benefits within life policies.
Standalone Exam Application Drill
This section is part of the rebuilt standalone Connecticut Life & Health Insurance (State) guide, so do not treat it as background reading. The official outline expects you to use this topic in mixed questions, where a general concept and a state-specific or exam-specific rule may appear in the same fact pattern.
| Trigger to recognize | How to use it on the exam |
|---|---|
| AD&D pays only for accidental death or specific losses, not illness. | Apply this point directly to exam-style facts and compare it with the closest wrong answer. In practice, ask what fact triggers the rule, what exception might change it, and what answer choice overstates the rule. |
| Benefits follow a schedule of losses (capital sum) with partial payouts. | Apply this point directly to exam-style facts and compare it with the closest wrong answer. In practice, ask what fact triggers the rule, what exception might change it, and what answer choice overstates the rule. |
| Coverage can be individual, group, or attached as a rider to life insurance. | Apply this point directly to exam-style facts and compare it with the closest wrong answer. In practice, ask what fact triggers the rule, what exception might change it, and what answer choice overstates the rule. |
| Common exclusions include sickness, war, suicide, and hazardous activities. | Apply this point directly to exam-style facts and compare it with the closest wrong answer. In practice, ask what fact triggers the rule, what exception might change it, and what answer choice overstates the rule. |
How this topic is tested
A typical question will not ask for a vocabulary definition. It will describe a client, applicant, insured, licensee, consumer, property owner, transaction, policy, claim, disclosure, office practice, or regulator action. First classify the topic under National Life & Health Portion: Chapter 26: Dental and Other Health Products. Then decide whether the issue is a product/coverage rule, a licensing or conduct rule, a contract/document rule, a timing rule, or a remedy/penalty rule. That classification keeps you from picking an answer that sounds true but belongs to a different domain.
Review move
When you miss a practice question from this section, write one sentence in this format: “The trigger fact was ___; the rule was ___; the exception or trap was ___; the correct result was ___.” This converts the section into a usable exam checklist rather than a paragraph you merely reread. If the missed question involved a number, deadline, disclosure, form, coverage condition, ownership status, or regulator authority, make that fact a flashcard.
Final self-check
Before moving on, you should be able to explain the section title in plain English, name the main rule without looking, identify one misleading answer choice, and apply the rule to a scenario that changes one fact. If you cannot do those four things, reread the core text and answer the embedded quiz before continuing.
What is the "principal sum" in an AD&D policy?
Which of the following would typically be EXCLUDED from AD&D coverage?
According to a typical AD&D schedule of benefits, what percentage of the principal sum is paid for loss of one hand?