An Accidental Death & Dismemberment policy provides you with protection should you die from an accident or suffer dismemberment. It will pay out in full or partial payment depending on your policy terms.
IRMI explains that some terms associated with AD&D claims and benefits may be confusing. For example, dismemberment could include several situations, but the general meaning under an AD&D policy is typically standard and does not include every situation you may think.
Principal when talking about AD&D policies is the full amount of coverage. For example, if you buy a policy worth $1,000, then the principal is $1,000. If a claim pays the full principal, it means you get the full $1,000 or the face value of the policy.
For benefits under an AD&D policy, dismemberment means the loss of a limb or sight only. It does include hands and feet as limbs. If you make a claim, it will pay out a fixed amount. You may only get a percentage of the policy unless you lose both limbs. For example, if you lose both arms or both legs in the incident, your policy will typically payout in full, but if you only lost one arm or one leg, the insurer will generally pay you only a percentage of the principal.
Many AD&D policies are double indemnity, which means they pay out two times the face value for death claims. This only applies to claims for death.
AD&D policies only payout for accidents. They will not pay for a deliberate action that causes harm or death or injuries or death due to a health issue.