Accidental death insurance typically pays out 100 percent of the policy's principal sum in the event of an accidental death. This type of insurance, often offered as part of an Accidental Death & Dismemberment (AD&D) policy, provides a financial safety net to beneficiaries if the policyholder's death is a direct result of an accident.
Understanding Accidental Death & Dismemberment (AD&D) Payouts
While accidental death usually triggers a full payout, AD&D policies also cover a range of non-fatal injuries, with payouts varying based on the severity of the loss. The "dismemberment" portion of the policy provides benefits for specific injuries, such as loss of limbs, sight, or hearing, due to an accident.
Here's a general breakdown of how payouts might be structured under an AD&D policy:
| Covered Event | Typical Payout (of Principal Sum) |
|---|---|
| Accidental Death | 100% |
| Loss of two limbs | 100% |
| Loss of sight in both eyes | 100% |
| Loss of hearing in both ears | 100% |
| Loss of speech and hearing | 100% |
| Loss of one limb | 50% |
| Loss of sight in one eye | 50% |
| Loss of hearing in one ear | 25% to 50% (may vary) |
| Partial loss of function or use of a limb | Varies (e.g., 25% to 50%) |
It's important to note that the exact payout percentages and covered events can vary significantly between insurance providers and specific policy terms.
Key Aspects of AD&D Coverage
- Principal Sum: This is the maximum amount the policy will pay out, often referred to as the face amount of the policy.
- Accident Definition: The policy will have a strict definition of what constitutes an "accident." Deaths or injuries from illness, natural causes, self-inflicted harm, or certain high-risk activities (like war or professional sports) are typically excluded.
- Beneficiaries: Upon accidental death, the principal sum is paid directly to the designated beneficiaries, similar to a traditional life insurance policy.
- Common Scenarios: Accidental deaths often covered include those resulting from:
- Motor vehicle accidents
- Falls
- Drowning
- Fires
- Suffocation
- Exposure to elements
- Homicides (if accidental to the policyholder)
For more detailed information on accidental death and dismemberment insurance, you can refer to resources from reputable financial institutions and insurance experts, such as Bankrate's guide on Accidental Death & Dismemberment (AD&D) Insurance.
