Accidental death and dismemberment insurance, also known as AD&D insurance, is different from life insurance. Obtaining policies for both types of insurance provides more protection to your estate if you perish. It’s important to understand the difference between AD&D insurance vs life insurance.
AD&D Insurance vs Life Insurance
Life insurance and AD&D are similar in that they are used as protection if a person dies. The differences between the two, while they may be small, can mean the difference between benefits being approved or denied.
Understanding the Basics of AD&D
AD&D is a lot like life insurance, but benefits are only paid in the event of an accidental death. The main premises of this type of insurance is that the policyholder cannot die due to “natural causes.”
If someone dies due to sickness or in their sleep, life insurance would pay out benefits, but an AD&D policy would not.
There are instances where the policyholder is injured, and this would be covered. Loss of a limb, for example, is covered under a policyholder’s policy and will:
- Pay out a portion of benefits in the event of dismemberment
- Pay out the full policy for accidental death
Calculating an AD&D payout is also complex.
“Every insurer will differ in this respect, but generally, your policy will pay out 100% for your death. If you are dismembered, the policy will pay out on a per-member basis. For example, loss of one eye might be worth a 25% payout, both eyes could be 50%,” explains Bankrate.
AD&D is often secured alongside life insurance and disability insurance to provide peace of mind that the policyholder’s family will be financially secure following the policyholder’s death.
This type of insurance is not a substitute for life insurance due to limited coverage. AD&D is often not a standalone policy and is mostly seen as a “rider.”
When a claim for AD&D is filed, it’s not uncommon for insurers to deny a claim. A claim can be denied for several reasons, but you can generally be sure that the insurer is denying a claim because the death was not accidental.
Insurers will argue that the death was natural, alcohol intoxication or drugs were involved, or even that false statements were used on insurance applications.
Denials can be appealed, but it takes prompt action on the beneficiary’s part to fight back against the denial. A lawyer is best suited to file an appeal and fight back against insurance companies.
Understanding the Basics of Life Insurance
Life insurance pays out benefits when the policyholder dies. Beneficiaries are named on the policy, and upon the policyholder’s death, the benefits are dispersed. The policyholder pays premiums each month or on an annual basis and can either take out:
- Term life insurance, which has an expiration date that’s listed on the policy
- Whole life insurance, which will remain active as long as the policy continues to be paid
A life insurance policy is a good choice for a person who wants to help their family make ends meet without their income.
The benefits of life insurance are:
- Most benefits are tax-free
- Lower costs than other forms of insurance
Insurance brokers will often push younger policyholders to the benefits of AD&D insurance vs life insurance. Younger policyholders are less likely to die young, so the broker will push AD&D insurance because the policyholder is more likely to die from an accident than natural causes.
AD&D insurance is not going to be a life insurance substitute.
Rider benefits, added on to a life insurance policy, will add death due to an accident to the policy. Insurance experts can best help you secure an insurance policy that will cover accidental and natural death.
AD&D Claims are Complicated
Notoriously complicated, it’s not uncommon for an AD&D claim to be denied because:
- Death or injury was unwitnessed
- Pre-existing condition contributed to the death
- There was evidence of past alcohol or drug abuse
- The accident falls in one of the many exclusions in the policy
- Medical treatment is blamed for the death
AD&D claim denials are not the end of the road. The ERISA Act will apply, requiring you to file an appeal and go through the process before filing a lawsuit. A federal lawsuit can follow if an appeal is denied.
It’s important to pay close attention to your policy to understand the different deadlines that apply.
The appeals process must follow standard appeal procedures, and if the procedures are not followed, the accidental death claim can be dismissed due to non-compliance. State laws do apply to personal AD&D policies, and you may face a non-ERISA appeal allowing you to file an immediate lawsuit.
If you or a loved one are facing denied AD&D benefits, you’ll want to contact us immediately. Insurers will try to deny benefits, leaving beneficiaries without the benefits they deserve. Fight back against benefit denials today.
We’ll file an administrative appeal on the denial and will file a lawsuit against the insurance company in federal court if benefits continue to be denied.