(also known as accidental death benefit)

A common (and low-cost) rider placed on life insurance is known as the AD&D, or Accidental Death & Dismemberment rider. The rider increases the amount your dependents would receive if you died in an accident (rather than of old age or disease), and pays out a certain sum if you lose an eye or a limb. This article considers the advantages and disadvantages of purchasing said rider.

First, consider the accidental death part of the rider. How you died shouldn't matter to your survivors' financial situation ? their needs will largely remain the same. If you are counting on the AD&D rider to provide the appropriate amount of death benefits, then you are under-insured, and what you are doing is simply gambling. If you aren't counting on the rider, then why are you buying it in the first place? Chances are, it will simply make you pay more for your insurance policy.

But there's still some benefit in being insured against accidental dismemberment, right? Suppose you lost your arm and couldn't work anymore?

Sure, it's important to be protected against such an event, but losing your arm, or your eye, doesn't necessarily mean never being able to work again. The rider takes no account of the actual effect of dismemberment on your income and ability to work. More importantly, what if you didn't lose an arm, but were instead afflicted with a severe disease, one that did prevent you from working? The AD&D rider would do nothing to help your situation. Again, you are taking a chance? something insurance is supposed to help you avoid.

It may be a better option to purchase a comprehensive health insurance policy and/or disability insurance policy, one customized for your needs. Such a policy would provide far better coverage than the AD&D rider offers, and would give you a much better value for your money.

There are many factors to consider in the purchase of both life and health insurance. Our expert insurance agents are here to help you decide on the best policy for you.