Small Business Guide to Accidental Death and Dismemberment Insurance

As a small to mid-sized business owner or manager, you’re always looking out for your employees’ safety and well-being. But no one—not even you—can protect them from every imaginable accident. 

Along with putting strong safety practices and workplace policies into place, you can do right by your employees by providing a financial cushion in the event of an uncontrollable accident. Particularly as a complement to a group life insurance policy, accidental death and dismemberment insurance is a critical financial tool that employers can explore including in their benefits packages. 

In this article, we’ll unpack the basics of accidental death and dismemberment insurance for employers. We’ll discuss the difference between accidental death and dismemberment vs life insurance, the cost of coverage, and how you can decide whether to provide this benefit for your employees alongside life insurance coverage. 

What Is Accidental Death and Dismemberment Insurance? 

Accidental death and dismemberment insurance provides an insured individual or their family with financial benefits in the event of the insured individual’s accidental death or a covered devastating injury. 

Suppose an insured individual dies in an accident. In that case, the named beneficiaries on their accidental death and dismemberment insurance policy will receive a lump sum payout, which can be used to help them cover funeral costs and soften the financial burden of losing an income-earning loved one.

Suppose an accident occurs that spares the life of the insured individual but causes significant injury, such as permanent paralysis, the loss of a limb or the loss of the individual’s ability to see, hear or speak. In that case, they’ll receive “living benefits.” 

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Accidental Death and Dismemberment vs. Life Insurance: Do Employees Need Both? 

While it’s very common to conflate the two, accidental death and dismemberment vs life insurance serve different purposes for your employees and their loved ones. While life insurance can also provide death benefits to loved ones in the event of an insured individual’s passing and can sometimes be drawn upon during an individual’s life, the two coverage types are very different.

As discussed, accidental death and dismemberment insurance provides payouts only in the event of certain accidents. 

Either type of policy may be obtained as a standalone coverage option. However, it’s very common for employer-sponsored benefit plans to combine these two coverage types, with accidental death and dismemberment coverage with life insurance as a rider on a life insurance policy.

At Axcet HR Solutions, we frequently help employers add an accidental death and dismemberment plan to their group life insurance policy. 

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Cost of Accidental Death and Dismemberment Insurance for Small Businesses 

While group life insurance premiums are generally thought of as very affordable (and many employers are surprised to find out just how affordable rates are), a key difference between group life insurance and accidental death and dismemberment insurance is cost. Monthly premiums for accidental death and dismemberment insurance are typically shockingly low for the potential value they provide and generally fall between $4-7 per month per person. 

Fantastic “deals” can be found for employer-sponsored group coverage, and the costs are far less than the typical group term life insurance policy. For this reason, many employers offer accidental death and dismemberment insurance for their employees and will generally pay 100% of the premium. 

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Should Our Small Business Provide Accidental Death and Dismemberment Insurance? 

If your employees work in high-risk positions or fields, such as manufacturing, oil and gas, construction, farming, the operation of heavy machinery, and so on—providing employer-sponsored insurance is par for the course. If your industry employs individuals in high-risk positions, it’s critical to speak with a small business insurance expert about obtaining group coverage for your employees. That may include life insurance, accidental death and dismemberment insurance, or both. 

Even if your employees don’t face any extraordinary risk in their typical day, providing a combination of benefits, including accidental death and dismemberment insurance, is a solid way to boost your total compensation package and create a financial cushion for your employees.

The provision of accidental death and dismemberment insurance in particular sends a strong message to your employees, letting them know just how valued they are. Even if an accident takes them out of work, employer-sponsored coverage shows that you’ve considered how they’ll provide for their families and themselves. 

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Axcet Is Here to Help You Source and Understand Small Business Insurance Options 

Are you interested in exploring insurance options, including accidental death and dismemberment insurance, life insurance, or health insurance policies for your organization? If so, sourcing coverage through a certified professional employer organization is an affordable and comprehensive route. 

Axcet HR Solutions is a certified PEO that specializes in helping small to mid-sized businesses source and save on the perfect benefits for their talent base, so they can focus on growing and scaling their core business. 

If you’re looking for help choosing the perfect plan(s), lowering your employer-sponsored premium costs, or getting your arms around the compliance of it all, Axcet HR Solutions is here to help. Schedule a consultation today.