Accidental death and dismemberment (or AD&D) insurance is a type of insurance, which pays out when you die or get hurt in some sort of accident (in the form of dismemberment a losing limbs or finger). It is not life insurance, since you are covered by accidents and injuries, not only death.
For example, your beneficiary will obtain compensation for your accidental death if you drive down the highway and accidentally veer in front of an oil truck. But if it is decided that when you were driving you had a heart attack and that is what caused you to veer in front of the vehicle, the receiver will not receive a check.
You're probably thinking why you'd need anything like AD&D if you already have life and health insurance. Yeah, your health insurance will certainly pay for it if you have to go to the hospital for an accident, but what about all the time spent on recovery? For whatever occasion, AD&D gives you funds that you can use like items such as groceries or petrol money because you don't make a paycheck. When your regular income isn't available, it's a nice thing to have.
In the case of death, the money will be used by your loved ones to make up for the lack of income.
As a add-on, to your life insurance policy, some insurance companies sell it. In your employee benefits plan at your workplace, you may also find AD&D insurance. It could be sold by other firms as their own scheme, apart from life insurance.
Be sure to weigh the advantages of each product if you decide to shop around for AD&D insurance. Only specific types of dismemberment might be covered by some policies. Some may have very particular restrictions on what a "accident" is. Before agreeing to a scheme, make sure that you know what sort of security you and your loved ones need.
Pros and Cons of accidental death and dismemberment insurance:
You will get bonus advantages from your plan with an accidental death and dismemberment rider. Most of these riders have a normal life insurance policy with twice the normal death payout. If your policy, for example, had a face value of $1 million and you died of an accident; the policy will pay your beneficiaries $2 million. This helps the receiver to gain even more money to pay for damages should you die from an accident.
Another advantage of this form of insurance the policy is that it is fairly inexpensive. You will normally apply a small monthly charge to this coverage relative to the benefits you earn from the scheme. When you add this coverage, the coverage doubles, it is literally like adding another policy. While you double your coverage, the premium cost for the coverage is not doubled.
One of the possible drawbacks to having this kind of coverage to your insurance is that it can compensate only under unique circumstances. The customer has to die from a certain list of tragedies that the insurance company provides. If the person does not die in any of the accepted conditions, the policy will not be compensated for. The risk of death due to an accident is much smaller than that of natural causes.