Essential Guide to Accidental Death & Dismemberment (AD&D) Insurance

AD&D Questions and Answers
(Last Updated On: September 16, 2023)

Accidental Death & Dismemberment Insurance (AD&D) is a familiar topic to you and your financial institution. In fact, reading this, I bet your first thought is, “I know quite a bit about it. What else is there to discover?”

That’s a fair assessment. It’s been a part of your institution for a long time. It’s common in group life insurance for employer benefit plans. For your purposes, it’s a standard membership benefit in association-styled organizations (like a credit union!).

I’m sure you also know that no industry embraced AD&D quite so deeply as the banking world, credit unions especially. Why? On the surface, AD&D has it all:

  • Affordable benefits per $1 premium
  • Easily understood benefits
  • Generous compensation to banking sponsors
  • High perceived member/customer value

We offer a number of products to help your members. If I may be candid for a moment, I wish all of our services had that kind of feature set. We put a lot of work into simplicity, but it’s great when your product starts simple.

Plus, most institutions provide a no-cost “loyalty offer” of basic insurance. My credit union does. How nice is it to tell people they get something for free (as in free lunch) just for being a member?

It’s no wonder AD&D programs are found in almost every credit union and community bank.

We’re going to dig into this product to gain a deeper understanding. Why? To help ensure that you choose and design an AD&D program that provides the maximum value for both your account holders and institution.

Plus, we will look at a pair of industry providers to help you better discover their services and decide which makes the most sense for your institution. This is just one part of our Direct Marketed Insurance series. Make sure to read them all.

GreenProfit Leaf Icon

Stuff Your Mind, Not Your Inbox. Get the info you need a couple times a month.
Subscribe Now!

AD&D: A Primer

Math Equations on Chalkboard
It’s not this complicated.

You know what Accidental Death and Dismemberment Insurance is. This is for those other readers who are newer to the industry and may not be familiar.

AD&D insurance pays benefits in the event of death or loss of life, limb, sight, speech, or hearing as the result of a covered accident. Loss of life, as the obvious worst-case scenario, receives the highest benefit compensation.

Most (though not all) other losses are paid based upon a percentage of the primary benefit.

The income generation of this product is in the sale of policies. To make this easier, a no-cost policy is available on a blanket basis to all those who join. Thus, the “member benefit”.

Ok! That’s the essentials. Now on to who offers it and the differences between them.

AD&D Providers

Two People with Laptops at Coffee Shop

There are several AD&D providers within the banking industry. For comparison purposes, let’s look at two of the largest. First, we will learn about their insurance, financial strength ratings, and brand names.

Then, join us as we look at their product lineups. This will help you better decide which makes the most sense for your financial institution.

CUNA Mutual Group (TruStage)

You know CUNA Mutual Group. They brand themselves as CMG within the industry. Their products fall under the TruStage branding.

Insurance is issued by CUNA Mutual Financial Group Life Insurance Company. They have a Financial Strength Rating of “A” Excellent by A.M. Best.

Franklin Madison

This firm, and its predecessor companies (Benefit Consultants, Inc., Progeny Marketing, Affinion Marketing Group, FISI Madison) began marketing AD&D programs to banks and credit unions in the 1970s.

Their insurance carrier is Minnesota Life, part of the Securian Financial group of companies. They carry a Financial Strength Rating of “A+” Superior.

AD&D Benefits

Regardless of which provider you choose, there are a series of basic benefits. We cannot guarantee your chosen provider will have the entire list. However, they are common across most.

Benefit Checklist

Some products may not be available in all states.

  • Additional Primary Coverage: Amounts up to $300k (50% reduction at 70 years of age)
  • Family Coverage: 50% of primary amount for a spouse, 20% of primary amount for children. If no children, 60% for a spouse. Family coverage also includes additional benefits for child care and college education, as well as a child savings fund benefit.
  • Double Accidental Death Benefit: If you die within one year of an accident as a result of traveling on a bus, train, or other public form of transportation as a ticketed passenger, your Additional Coverage benefit doubles. This benefit covers the primary insured only, even if Family Plan is selected.
  • Increasing Benefit: Each year, the value of your Additional Coverage increases by 5%, up to a specific maximum.
  • Accident Hospital Indemnity: If you are confined to a hospital as an inpatient as a result of a covered loss for more than 7 consecutive days (starting within 30 days of the accident), then a monthly benefit will be paid. The monthly benefit will equal 1% of the additional coverage amount up to a stated maximum amount.
  • Education Benefit: Pays an education benefit for each eligible dependent child who was enrolled as a full-time student in an accredited institution of higher learning on the date of the insured’s death.
  • Child Care Assistance: If you and your spouse are covered by the Family Plan and either dies in an accident, your Additional Coverage pays a benefit each month for childcare expenses.
  • Grief Counseling: Benefit pays a percentage of additional coverage amount for grief counseling to family members.
  • Seat belt and airbag benefit: Additional Coverage payout increases by 10% if insured dies in a private vehicle accident while wearing a properly fastened seat belt or is protected by an airbag. If the Family Plan is selected, this benefit may extend to insured’s eligible spouse and children.
  • Pilot Benefit: Applies to pilots flying any aircraft (Unless you’re trying to hang on to a drone. Don’t do that.)
  • Adaptive Home and Vehicle Benefit: Provides a benefit if the insured’s home and/or private motor vehicle requires modifications to accommodate the insured’s dismemberment or total and permanent disability resulting from a covered loss.

TruStage Optional Benefits

MBA Keyboard - Control Option
Get it…you’re in “control” of your “options”? I’ll be here all week.

In addition to those listed above, TruStage has optional benefits you may also include. Members may elect and pay for these additional coverages if made available by your credit union. To be eligible, members must have the Additional Coverage benefit.

  • Cancer Coverage: Pays a one-time cash benefit based upon a percentage of the Additional Coverage upon a single diagnosis of a covered form of cancer.
  • Heart attack, Stroke, and Cancer Coverage: Pays a one-time cash benefit based upon a percentage of the Additional Coverage upon a single diagnosis of a covered form of cancer, heart attack, or stroke.

There’s a lot to consider. The easiest place to start is deciding on your goals. Is it to provide the maximum coverage for members or the lowest-cost policy to encourage more subscriptions?

Once you have the intent settled, then you can build a plan that fits your goals. Customize using the array of benefits to create the most compelling offer possible for account holders.

Now the challenge is letting people know coverage exists and why they’ll want it! Let’s move on to the marketing work.

Marketing to Offer AD&D

Even in the age of social distancing and work from home, there’s one channel that is far less affected: Direct mail. According to the Direct Marketing Association, direct mail’s response rate is 4.4%. Compare that to 0.12% for email.

Gray Mailbox

Sidenote: Yes, texting (SMS) has far better response rates, but cold contact is both challenging from a compliance standpoint and new product sales. Perhaps following up later once they know about your AD&D program with gentle reminders…

After the physical engagement, continue with digital campaigns. These can direct people to landing pages (to notify on warm leads) that start email drip marketing efforts. Then, forward to your application portal.

Through it all, encourage interactions via their chosen path, be it online chat, phone, or self-directed digital resources.

Provider Marketing Strategies

Both TruStage and Franklin Madison utilize direct mail as the primary marketing channel for their AD&D programs. However, each approaches it in their own unique ways.

Once you reach a point where you are joining meetings, we suggest you ask a series of questions to help you decide if their process is right for your institution.

If your institution is a credit union, you have a choice between TruStage, Franklin Madison, or other independent administrators (TruStage is only for CUs). Get the questions to ask during your decision-making process.

Institution Benefits

We spent a lot of time covering the benefits your members can receive with an AD&D program. Beyond “make more money”, what are the reasons your institution would offer AD&D?

Once again, if AD&D is old hat to you, feel free to skip past this section to the Costs of AD&D.

Member & Customer Loyalty

Your AD&D plan is a free benefit for account holders. That makes it a loyalty tool. Unfortunately, we don’t know of any studies proving this correlation. So, ensure they know by providing a “Benefits of Membership” section of their account.

Include the value of their free AD&D (with offers to increase it at a low cost) alongside other perks of being a part of your institution. Share numbers specific to their account relationship. Include ATM fee waivers, interest rate boosts, and more.

Sidenote: In addition to my credit union, I also have accounts at Bank of America. Their rewards program does just what I explain above. I can view what I have “earned” from the benefits I receive. It’s a literal dollar value for my relationship.

Non-Interest Income

Beyond protecting account holders, you’re offering AD&D to generate a continuing stream of non-interest income. Makes sense. How much can you expect to get?

Calculated using a quarterly royalty: As much as 30% (sometimes more) of net collected premium, less the cost of the basic “free” insurance.

Royalties are reduced in New York state.

Cash Bonuses on Administrator Switch

Briefcase Filled with Cash

There’s another way to boost non-interest income from the program. And it has nothing to do with offering or selling. It’s in changing administrators. A now-common practice includes “take-over” cash bonuses paid upon signing with the new provider.

Their stated goal is to offset potential revenue loss from early contract termination penalties. We all know what they really do: Create spinning dollar signs in the eyes of a profit-hungry institution. It’s a bag of cash, and bags of cash are tempting. Why not?

The amount offered is based on current premium and total eligible policyholders. Just do me a favor, ok? Think it through with a clear head on long-term value. Make sure you’re not signing an agreement because a big check right now sounds awesome.


The majority of the policies you provide are free to account holders. Of course, that doesn’t mean they are free for everyone. Since insurance is a regulated product, the insurance company must charge a premium.

However, premiums for AD&D are traditionally low. So even though the costs get passed to your institution, they’re manageable. Based on your tolerance, most institutions provide either $1 or 2,000 of basic AD&D insurance to all members or customers.

What can you expect those to cost?

Accounting Chart with Pen and Calculator

Rates can vary by state, provider, and the size of your total insured. Typically, it’s between $0.07 and $0.10 per month, per $1,000 face amount. This is billed monthly to your institution and debited from your administrative allowance.

So, if you have 100,000 account holders, that’s between $7,000 and $10,000 per month. Of course, we’re assuming all opt-in and don’t include the profits from those who choose to upgrade their coverage.

Rates for additional coverages depend on what’s chosen. TruStage lists rates between $1.00 and $1.50 for each $10,000 of face amount. You can choose your premium, subject to local laws, but any changes must be consistent across the entire group.

Pros & Cons of AD&D Insurance for Your Institution


Thumbs Up in Red and Purple Lighting
  • Institution Loyalty: Account holders see it as “free insurance” with the option for more. Costs to your institution are minimal. A free insurance benefit has high perceived value and is a long-term component of your retention strategy.
  • Guaranteed Acceptance: All eligible account holders age 18 or older who complete and return an Insurance Request Form will be accepted. There are no medical questions nor physical examinations required.
  • Low Cost Security: Beyond the free level, account holders can purchase affordable group-rated coverage at a range of price-points.
  • Perceived Importance: Accidents are the third leading cause of death in the U.S., after heart disease and cancer. Also the #1 cause of death for adults aged 25 to 44, according to the CDC (outside of the COVID-19 pandemic impacts).
  • Minimal resources: The administrator handles heavy lifting, including marketing, fulfillment, claims & customer service, and billing.
  • Revenue: Your institution receives a new stream of non-interest income.


Thumbs Down in Red and Purple Lighting
  • Minimal Chance of Needing Policy: It’s unlikely a policyholder will ever use it (and we’d all rather they never need to). According to the CDC, there are 169,936 unintentional injury deaths each year (about 52 deaths per 100,000).
    • While the risks are real, the chance of accidental death is fairly low.
  • Low Group Rates: People who have employer group life plans already get AD&D and can purchase more coverage from them. Of course, AD&D benefits may differ between companies and administrators.
    • Rates from providers in the banking industry can be as much as 500% higher (partially due to the marketing & administrative costs) than those charged in employer-employee groups.
  • Legal Considerations: AD&D has been a target of insurance departments and class-action efforts. In New York, the insurance department determined that a carrier was not meeting their Minimum Loss Ratio (MLR) standards, and assessed fines against that carrier accordingly.
    • This case affected rates and revenue for all parties doing business in that state. In other actions, attorneys allege that consumers were “misled” into enrolling and authorizing premium deductions from their accounts.
    • The take-home message here is to ensure your provider/administrator is following all the regulations. Then, ensure your own messaging is clear about costs and options.

Apply Your AD&D Guide

Let’s be honest: You already have AD&D insurance at your institution. And, if for some reason you don’t, it’s likely you are in a due diligence search for a provider right now.

That’s fine. We hope this guide helped you understand your options, while highlighting features from two industry leaders. Plus, you have a series of pros and cons to address during your own decision-making process.

Most institutions decide offering AD&D insurance is a beneficial strategy for all concerned.

If your current plan is a bit long in the tooth, or has just coasted on inertia, it’s time for a review. You owe it to your account holders. Why?

A tiny bit of background: Our COO, Keith Winn, began offering AD&D programs to credit unions in the 1980s. He told me the plans continue to evolve, providing more flexibility, options, and marketing strategies for you. Especially recently.

He had the rad logo and all!

He’s got the experience and I’m going to trust his insights. Maybe you should, too!

A full review may open possibilities to better serve your account holders, while further growing your revenue stream.

Serve Your Financial ABCs With The Learning Library

From AD&D to VSC, we look to cover the alphabet soup of financial services. And our goal is to do it in a way you can easily understand while being obsessively honest and transparent. That’s the Learning Library.

Make sure you stay in the loop as we work through the letters by Subscribing to the Learning Library. For your next step, may we suggest checking our content on Direct Marketed Insurance products? Surprise your team with such psychic insights!

And, as always, thank you for being here!

Image credits: Question by Anemone123. Equations by Chuk Yong. Two people with laptops by algedroid. Checklist by Gerd Altmann. Mailbox by Manfred Richter. Briefcase with cash by S K. Calculator and pen by Steve Buissinne. All from Pixabay. Thumbs up and down by cottonbro studio.

Joe Winn - CU Geek

Blogger. Speaker. Futurist. Part-time Jedi.

Dedicated to helping your credit union, large or small, deliver mission-focused financial empowerment to your members. And make a positive impact on your community while you’re at it.