How to Calculate the Right Amount of AD&D Coverage

Accidental Death and Dismemberment (AD&D) insurance can provide compensation for you and your family in case you are seriously injured or killed due to an accident. For some people, life insurance is sufficient, but for others with dangerous occupations, life insurance isn’t enough. Like car insurance, nobody anticipates using it, but coverage needs to be calculated in advance in order to be sufficient. Taking a little bit of time to calculate how much AD&D coverage you need can provide peace of mind for you and your family in the event of a worst-case scenario.

What Does AD&D Insurance Cover?

AD&D insurance typically supplements most life insurance policies to provide compensation in case the insured dies as the result of a car accident, exposure to the elements, drowning, accidents involving heavy equipment, a fall, or homicide. It also covers accidents that result in the loss of a limb or loss of a thumb and index finger, as well as loss of speech, hearing, or sight.

The purpose of AD&D insurance is to protect your family from financial hardship should an accident prevent you from working due to a covered event or death. Benefits from AD&D coverage are paid out in addition to any benefits from life insurance policies. The key to ensuring you have enough coverage is knowing how much financial support your family will need.

How Much AD&D Coverage Do You Need?

The answer to this question isn’t easy and depends upon you and your unique situation. There are a few things to consider before calculating your AD&D coverage.

  1. Outstanding debt obligations, including mortgages, credit cards, student loans, utilities, and car payments.
  2. In addition to your outstanding debts, you should also consider whether your spouse is employed. If he or she is able to make payments without relying on your income, you likely won’t need as much AD&D coverage as you would if you were the sole breadwinner.
  3. Next, consider whether you have a dangerous career or engage in risky behavior. Many insurance carriers won’t cover risky activity, so keep that in mind. But if you travel often or if your job is in a high-risk industry, you might want to consider AD&D insurance as a lower cost supplement to a regular life insurance policy.
  4. In addition to the amount of AD&D coverage, you also need to consider the type that’s best for you. There are three types of AD&D coverage:

Enrollee Only: Covers only you

Enrollee + Family: Covers you, your children, and your spouse or domestic partner

Modified Family: Covers you and your children

  1. Next, choose a face amount for your policy. The higher the face amount, the higher the premiums are. Most AD&D premiums are a bargain compared to what they actually cover. For accidental death, your AD&D beneficiary will typically receive 100 percent of the face amount. For accidents covered by the policy, including loss of a limb or loss of sight, your AD&D payout will be a portion of the face amount.

AD&D insurance is inexpensive, costing as little as $60 per year. That’s $5 per month. Get a free AD&D quote by calling 800-777-5620, or by visiting your local Freeway office to speak to an insurance agent today.