AD&D vs Life InsuranceAccidental death and dismemberment insurance is a type of insurance similar to life insurance. It will pay out if you experience a serious accident that results in permanent injury, such as losing a limb, or death. It's a good idea to understand how these two types of insurance overlap and which might be best for you.
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According to the CDC, accidental deaths were the third leading cause of death in the U.S. in 2020.
Many people take out AD&D insurance to protect themselves against life-changing events and their families if this ever happens to them.
While this type of insurance is no substitute for traditional life insurance, it can offer added coverage for people involved in traffic, workplace, or other types of accidents.
This article will explore AD&D insurance, what it covers, how it is different from life insurance, and what you can expect to pay.
What is Accidental Death and Dismemberment Insurance?
AD&D is a type of supplemental life insurance that covers a policyholder or their beneficiaries in the event of accidental death, permanent injury, or disability.
A policyholder will pay a monthly or yearly premium to an insurance company, covering them if they are injured or killed.
As the name suggests, two losses are covered by AD&D insurance in general — death and dismemberment.
If a person with AD&D insurance dies while the policy is active, their insurer will pay a death benefit to listed beneficiaries.
If a person is impaired or disabled due to a covered event, their insurer determines the level of compensation they should receive according to their policy.
Depending on the severity or degree of injury or dismemberment, a policy will pay out a percentage of the plan’s total benefit value.
For example, let’s say a person with AD&D coverage of $250,000 loses a finger in an accident. They might receive 20% of their policy’s death benefit ($50,000) as compensation. However, if the person loses a hand, they might receive 40% ($100,000).
AD&D policies are purchased alongside a permanent or term life policy and work similarly to other types of insurance coverage.
Permanent vs Term Life Cover
Permanent Life Insurance is insurance that does not have an expiration date. These policies will only end if the policyholder dies or stops paying premiums.
Term Life Insurance is life cover for a set period. The insurance contract will end after a specified number of years and can range in length between one and thirty years.
There are different AD&D coverage options. If you’re considering buying this type of insurance, you’ll generally have three options available:
Accidental Death Insurance.
Accidental Dismemberment Insurance.
Accidental Death and Dismemberment Insurance.
Check your AD&D coverage before you sign a contract
Because there are different types of plans that fall under AD&D insurance, it’s essential to know what your coverage is when you sign a contract with an insurer.
Check with your insurance provider and ask them how you’ll be insured in specific circumstances, such as a car accident, and see if you’re getting the necessary cover.
Keep in mind that AD&D insurance is not the same as life insurance. Policyholders shouldn't rely on these plans alone because of the specific coverage limitations and exclusions they have.
AD&D Insurance vs Life Insurance
While AD&D insurance and life insurance both pay death benefits and cover people in the event of their death or injury, they are different in several ways.
1. Life insurance coverage is broader than AD&D insurance.
AD&D plans will only pay out a death benefit for specific events and circumstances that the policy covers. Life plans also exclude certain events or circumstances from coverage. However, the list is much shorter.
For example, AD&D insurance will rarely cover deaths or injuries that are the result of illness, but life insurance will usually pay if the cause of death is a disease or condition.
2. Life insurance won’t cover you for accidental injury.
Life insurance policyholders won’t be covered for accidental death, injuries, or disabilities unless their life cover has an added AD&D rider.
3. AD&D cover is usually for smaller amounts than life insurance.
This will depend on the level of cover a policy offers, but accidental death and dismemberment insurance payouts are generally smaller than permanent life insurance.
Most AD&D insurers have maximum coverage limits up to $500,000, while life insurance providers offer plans up to $10 million and sometimes more.
4. AD&D insurance has a set coverage period.
AD&D insurance usually only lasts for a specified time that is outlined in your insurance contract. For example, 20 years.
Life insurance policies can also provide coverage for set periods (known as term life insurance). However, people can also purchase life insurance that never expires (known as permanent life insurance).
What Does AD&D Cover?
There can be significant differences in coverage between people based on their insurer and contract terms.
Plans have specific criteria for covered events and protect policyholders and their beneficiaries against death and injury that are:
Specified in the contract’s terms of coverage
Accidental Death Insurance
Most accidental death and dismemberment insurance plans will cover a policyholder's death for events such as traffic accidents, workplace accidents, exposure, and drownings.
However, you should look over the terms of your contract to understand how your insurer classifies different causes of injuries and deaths.
Accidental Injury Insurance
In many cases, a severe injury can affect a person’s ability to work for the rest of their life.
Accidental death and dismemberment insurance will cover policyholders if they are injured through a covered accident that prevents them from working again or earning the same income as before.
What does dismemberment mean?
Dismemberment is the loss of a limb, such as a hand, finger, arm, or leg.
However, with accidental death and dismemberment insurance, policyholders are also covered for injuries that cause permanent disability, including:
Loss of eyesight.
What Does AD&D Not Cover?
Accidental death and dismemberment insurance will not pay out if the injury or death results from natural causes or an event not covered by your life insurance policy.
If an injury or death occurs because of an illness, then an accidental death and dismemberment policy will generally not cover this because it is seen as a natural cause.
For example, AD&D does not cover heart attacks, infectious diseases, or terminal illnesses because these health conditions are considered natural causes and not accidental.
Terms You Should Know
Natural Causes: These are defined as death or injury that is not the direct result of an unforeseen, unnatural event. AD&D insurers usually define all illnesses and lifestyle-related conditions that cause injury or death as natural causes.
Death Benefit: This is the amount of money paid out to beneficiaries in the event of a policyholder’s death.
Exclusions: These are specific conditions set out in an AD&D insurance policy limiting coverage to particular events and circumstances.
Riders: Additional terms of coverage that policyholders can add to an insurance policy. For example, a person might add a workplace insurance rider to their AD&D contract to cover them for accidents.
Similarly, there are circumstances when an AD&D plan won’t cover a policyholder. Some of the most common exclusions include:
Wartime acts or injuries: A policyholder or beneficiary cannot claim accidental death or injury for an event that takes place in a war zone or active combat situation.
Terrorist attacks: If a person is injured in a terrorist attack, they will not be covered by their accidental death and dismemberment insurance policy. However, there have been situations when companies have waived this condition and paid out to policyholders and beneficiaries.
Accidental deaths or injuries while committing a crime: AD&D will not pay a claim if the policyholder was driving under the influence of alcohol, participating in a riot, or committing a felony when the accidental death took place.
Illness or disease: Accidental death and dismemberment insurance will not cover deaths that result from chronic conditions or diseases (including mental illness) unless the death or injury is directly linked to the performance of a job or role.
Suicide and self-inflicted injuries: This includes drug overdoses and self-harming.
Injuries that took place before coverage started - AD&D insurance will not cover accidental injuries that happened before a policyholder signed up for cover.
High-risk activities: This includes extreme sports such as sky-diving and scuba diving. It also includes flying a plane, racing cars, and even playing professional sports.
Insurance companies will always investigate the cause of death or injury. They will also look at other factors to determine whether or not the claim is valid, such as:
The length of time between the event and the death of a policyholder.
The circumstances around the death.
The policyholder’s health condition and medical history.
For example, let's say that a policyholder is involved in a car accident and dies one year after the event.
The insurance company will first look to determine a clear link between the policyholder’s death and the stated cause of death.
They will look at the police report, and insurance claims filed for the accident.
They will also investigate whether the policyholder had underlying health conditions which contributed to their death.
Are there different types of AD&D Insurance?
People can get an AD&D insurance plan for their family or sign up for AD&D coverage through their employer, union or professional association. Some popular AD&D insurance options include:
Group AD&D Insurance: These are policies that can be purchased to cover groups of people, such as families. A policyholder can purchase Group AD&D to cover their partner, spouse, or children and pay a single premium.
Voluntary AD&D Insurance: These are optional benefits that employers offer staff or employees. With voluntary AD&D insurance, employees have the option of getting AD&D cover once they join a company, and employers can either pay part, or all of, the cost of coverage.
AD&D Riders in a Life Insurance Policy: Some life insurance plans let policyholders add AD&D coverage to their contracts. AD&D riders will usually cost the policyholder more each month, but they will get full AD&D coverage along with their life insurance.
What Does AD&D Insurance Cost?
Plans can cost anywhere from a few dollars to over $100.00 per month. The best way to find out what your different AD&D options might cost is to use a life insurance agent to get you different prices and explain coverage options.
The cost of AD&D coverage depends on:
The insurance company.
The level or amount of coverage.
How many people are insured or covered.
Other provisions or riders in the insurance contract.
If you’d like to find out what AD&D coverage will cost you, feel free to reach out to one of our life insurance consultants to get a quote on AD&D cover from the top providers in your area.
Is AD&D Insurance Worth It?
AD&D is a simple way of getting accidental death and dismemberment coverage. These types of plans are usually more affordable than a term or permanent life insurance policy, and you won’t be required to take a medical exam before you are covered.
If you don’t qualify for a term or permanent life insurance or you cannot afford life insurance premiums, AD&D insurance can offer your family some financial security if something happens.
However, if you’re considering AD&D insurance, remember that:
It doesn’t offer the same coverage as life insurance.
There are other coverage options, such as disability insurance.
It also depends on your lifestyle and work. People with jobs that require a lot of driving or the use of dangerous equipment can use an accidental death insurance policy to protect their families against traffic, recreational, or workplace accidents.
Where can I learn more about life insurance?
If you want to learn more about different life coverage, such as disability insurance, chronic illness cover, term life, and permanent life, check out our Life Insurance Hub.
From there you can find articles on life insurance benefits, policy costs, and living benefits, as well as reviews of life insurance companies across the U.S.
If you need help deciding whether AD&D insurance is right for you, reach out to our consultants on 1-888-912-2132 or firstname.lastname@example.org to find out what affordable life insurance cover is available.