What Is Dismemberment Insurance?

Dismemberment coverage is usually included as part of accidental death and dismemberment (AD&D) insurance. Depending on the insurance company, dismemberment insurance may be offered as part of life insurance coverage, a worker’s compensation package, or as a rider on a health insurance policy. This type of insurance offers benefits to your dependents if you lose a limb or experience a function loss of some kind (e.g., vision loss). Read on for more information about what dismemberment means and the limits of dismemberment insurance.

Defining Dismemberment

Strictly speaking, dismemberment refers to the loss of limbs from a living thing. With regard to dismemberment insurance, however, the term is defined more broadly. Usually, insurers define dismemberment as paralysis, the loss of a limb or fingers, and/or the loss of a major function. Interestingly, most insurers do not define the loss of a toe or toes as dismemberment, so coverage usually begins above the ankle. We’ve included a more complete list of what insurers commonly consider dismemberment for coverage purposes below.

• Loss of a hand or foot
• Loss of sight
• Loss of hearing
• Loss of speech
• Quadriplegia, triplegia, hemiplegia, or uniplegia
• Loss of a certain number of fingers

Purpose

Dismemberment insurance is meant to compensate your beneficiaries for what your loss was worth, economically speaking. For instance, if you lost your sight in an accident, you would probably not be able to continue with your work. Dismemberment coverage attempts to reduce the ensuing financial hardship on your family by paying proceeds to your dependents. Basically, dismemberment insurance is meant to fill in the holes left by other insurance policies, such as life and health insurance.

Should You Buy It?

Most financial planners recommend that you put your insurance dollars into other policies rather than purchasing accidental death and dismemberment coverage. Dismemberment insurance only pays benefits in very specific and extremely unlikely scenarios, which means it’s probably not worth the investment. What’s more, losing a limb, a finger, etc. even with dismemberment coverage does not automatically entitle you to the full amount of coverage. Some forms of dismemberment only entitle you to a partial amount of coverage. For instance, if you were to become paraplegic, most insurance companies would only give you 50%-75% of the coverage amount of your policy because you are not fully paralyzed.