Hi! So what am I talking about? Have you ever received a Benefit Notice from your bank about giving you $1,000 insurance benefits?

I have! Was I skeptical at first… YES but I decided to look further into it.

This coverage is for accidental death and dismemberment insurance plan. There is no medical exam needed or health questions to answer.

Most people throw this away but let’s look into this a little further.

How Does AD&D Insurance Work?

Accidental death and dismemberment (AD&D) insurance is an insurance policy that pays a death benefit upon the accidental death of an insured or upon the loss of a limb due to an accident.

AD&D is purposed to serve as a supplement to regular life insurance as coverage is limited to certain types of accidents.

No benefit is payable if the death is due to natural causes or other excludable events. 

Accidental Death & Dismemberment insurance pays a cash benefit if you die in a covered accident.

It also pays benefits for covered injuries caused by an accident, including loss of eyesight, hearing, or speech, or the loss of a hand, foot, eye, thumb or index finger. You could use this money to cover any expenses while focusing on recovery.

What Type of Accidental Death Benefit You Can Expect

Even though every insurer offers different payout policies, they all usually pay 100% of its value to any beneficiaries in the event of your accidental death.

As for dismemberment, it depends on how many body parts are taken; one eye could entail a 25% or a 50% payout, for instance, depending on the insurer.

The primary advantage to AD&D over life insurance alone is that life insurance will not pay anything for severe or disabling injuries, while AD&D will. Losing limbs or eyesight, for example, can have just as severe of a financial impact on your family as your death would. 

So Why Do Banks Offer This?

The idea is to use the offering of a modest $1,000 insurance policy, which might cost the bank only a few cents in premiums, as a lure to sell increased coverage that can provide significantly more in steady profit.

These free policies are almost always followed up by attempts to upsell you, say, to $300,000 worth of coverage for “only” about $10 a month.

The first thing you need to keep in mind is that your chances of losing a hand or foot in the modern workplace are pretty slim. The Center for Disease Control reports that deaths caused by unintentional injury total only 200,995 per year, or 61 out of every 100,000 people. https://www.cdc.gov/nchs/fastats/accidental-injury.htm

Final Thoughts:

AD&D is free coverage that I got from my bank and doesn’t cost me anything. Do I work in a risky line of work, no. However, you never know. I recommend that you read all the information that is sent to you, call the bank if needed, and ensure that you are only selecting the free coverage. Not the upsell if you don’t wat or need it.

The bank is trying to keep you as a loyal customer, and this is a way to reward you.

Learn more: Is Accidental Death & Dismemberment Insurance Worth It? – YouTube

Your Turn- What are your thoughts on getting this coverage?