The forgotten benefit

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You can’t help but cringe a little when you hear the phrase, “Accidental Death & ‘Dismemberment Insurance”.

I can tell you it’s not much of an ice breaker at an employee information meeting either. However for the average person, accidental death & dismemberment insurance, or AD&D as it is commonly known, can be the ultimate in catastrophic insurance coverage.

This employee benefit is inexpensive compared to almost all other benefits typically made available under employer-sponsored benefit plans. This means the payout is quite significant relative to the premium paid and offers significant financial security for little in cost.

An accidental death benefit is paid to a named beneficiary when the death claim is due to an accident unrelated to any illness or disease. The dismemberment component of the AD&D benefit refers to the loss of or permanent loss of use (paralysis) of one or more parts of your body. These benefits are typically paid when an employee loses the use of a hand, arm, leg, or even sight and/or hearing. The schedule outlines the number and combination of losses and principle payment associated with that loss. However, the importance of the benefit cannot be overlooked, in that the individual affected certainly needs this financial assistance at a time when help is not often available.

In addition, the AD&D claims are paid out on a tax-free basis. Note that the most recent Federal Budget states that employer contributions (employer paid premium) in respect to a sickness or accident benefit will now be taxable to the employee for income tax purposes (effective Jan. 1, 2013).

The ideas expressed here are the authors’ and do not necessarily reflect the publication’s position. Want to write a response? Contact us here.

This was first published on TRG’s Group Benefits Blog.

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