The insurance industry has an awareness month for life insurance, for disability insurance and long-term care insurance.
Accidental death and dismemberment (AD&D) insurance has to make its way in the world on its own, with consumers, employers, and maybe even some agents looking at it skeptically and asking, “And you are…?”
But analysts at Eastbridge Consulting Group Inc. found in 2012, when they asked insurers about many different voluntary products, and that insurers were keenly aware of AD&D insurance: They identified it as their most profitable voluntary product.
AD&D coverage protects people against the risk of a death or the loss of a body part due to an accident.
It’s often sold along with life insurance and health insurance. PolicyGenius.com, a web-based quote service, says consumers can buy stand-alone AD&D coverage for less than $10 per month per $100,000 of coverage.
Jennifer Gassaway, life insurance product manager at The Standard, recently talked about her views on the product in an email interview.
Here are five things she said about AD&D coverage, drawn from the email interview.
1. Agents should think of AD&D as a side dish, not an entree.
“Advisors should raise awareness for AD&D in a way that does not take away from life insurance, because life insurance is a foundational piece to financial security,” Gassaway said.
2. AD&D can do jobs life insurance doesn’t normally do.
“It can provide extra coverage if one dies from an accident; and it covers things that life insurance doesn’t cover, like loss of a hand or eyesight due to an accident,” Gassaway said.
3. Agents who are talking to consumers about AD&D coverage can help the consumers understand what their policies or riders really cover.
Many consumers “know that it covers accidental death, but they do not understand which dismemberments are covered,” Gassaway said. “Depending on the individual’s policy, there are specific accidental dismemberments that are covered, such as the loss of an arm or paralysis of half the body. There may also be benefits in the contract that many people aren’t aware of such as benefits to help pay for a child’s higher education or care if one dies in an accident.”
4. Some agents may need to bone up on the AD&D definition of “accident.”
For the issuer of a typical AD&D policy to pay a claim, “the accident must occur independently of all other causes,” Gassaway said. “The AD&D policy exclusions are included in the policy to help define an accident further. If a situation that is included in the policy exclusions causes an accident or contributes to the accident, then a claim may not meet the definition of an accident.”
Gassaway gave the example of a healthy man in his 40s who climbed on a ladder to put up Christmas lights.
“Now let’s say that man has a heart attack, causing him to fall off the ladder and lose a limb, or even pass away,” Gassaway said. “Without the heart attack, this could have potentially been covered under AD&D, but because of the heart attack, it wasn’t a true accident. The heart attack could have been a pre-existing condition and was ultimately what caused the man to fall and get injured or die.”
5. Agents can help make clients aware of the reality that accidents happen.
For Gassaway, one of the most striking AD&D-related statistics is the number of people in the world who die in car accidents each day.
“There are roughly 3,287 deaths per day due to car accidents,” she said.
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