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Accidental death insurance: common as credit cards

Ever wonder whether you should pick up some insurance before boarding a commercial flight, just in case? Wonder no more: Chances are good you already have it right in your wallet.

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Each of the four major credit card brands -- American Express, Discover, MasterCard and Visa -- offers some form of what the insurance industry calls "accidental death and dismemberment," or AD&D, coverage on some or all of their consumer credit cards. Benefits vary by brand and card type, and can range in coverage from $100,000 to $1 million.

If your card offers it, you are automatically covered while traveling on what is called a "common carrier conveyance," such as a commercial flight, boat, train or bus, as long as you paid for your ticket with the credit card that offers the coverage. Your spouse and dependent children traveling with you might also be covered, as long as their fares were purchased on a card that covers them.

The card companies began offering insurance products as value-added incentives in the mid-1980s. You'll usually find your AD&D coverage buried well down the list of happier-sounding card member benefits such as purchase security, auto rental collision-damage waiver and concierge services, and for good reason.

"It's really hard to advertise: 'Please use this card, because you might die in a plane crash,'" says Alice Droogan, global solutions leader for MasterCard International.

Recently, MasterCard scaled back its coverage, based in part on focus groups that found that consumers did not perceive AD&D as a particularly valuable benefit.

James Hamilton, senior vice president of Chubb Accident and Health North America, which underwrites MasterCard's AD&D program, says that while the retrenchment may be due to changing card member demographics, the card companies in general are retooling some programs to recoup some of their costs.

"One of the shifts that happened probably two years ago was the big players decided to say: You know what? For the platinum card, you used to get $1 million in accidental death coverage, move that down to $500,000 or $250,000, or in some cases $100,000. There is some shift to offer the customer base the option to buy up that coverage to the original $500,000 or $1 million at a group rate and not individual rate, so it is extremely affordable," he says.

Although it might be the last thing on your mind as you prepare for boarding, Hamilton says your credit card travel accident coverage remains a terrific bargain in a worst-case scenario.

"AD&D is a fairly inexpensive way to leave an estate behind," he says. "If it is a core benefit at no charge to you, it would be the smartest thing you could do."

In the event of death or dismemberment, here's a general guide to coverage by card brand:

American Express
American Express offers two levels of coverage for card members, their spouses and dependent children, depending on the card type, at no extra cost to cardholders. If you hold the Green, Gold, Rewards Plus Gold, Student, Senior Member, Blue, Blue Cash, Optima, Delta SkyMiles, Hilton HHonors and Starwood consumer card, or the Executive Business, Costco Business or Business Management Account from OPEN: The Small Business Network card, you have $100,000 coverage in the event of accidental death or dismemberment. If you hold a Platinum or Centurion card, your coverage is $500,000.

Toll-free claims assistance: (800) 645-9700. AMEX Assurance Co., in De Pere, Wis., underwrites American Express AD&D coverage.

Next: "In some cases, the insurance company will find your survivors."
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