AD&D is accidental death and dismemberment insurance. It is also called Accidental Loss of Life and Severe Injury Benefits. AD&D is not the same as term or permanent life insurance, both of which pay death benefits regardless of the cause of death (with some exceptions).
AD&D insurance is often an employee benefit provided as a term life insurance policy rider. It may also be a stand-alone plan through an employer or private plan. Since AD&D covers only accidents, it can best supplement a standard life insurance policy.
AD&D insurance is often a supplemental benefit offered by employers.
AD&D insurance only pays out when the insured dies or is severely injured due to a covered accident.
Survivors can receive the policy’s total face value upon the policyholder’s unintentional death, while the insured may receive a partial or complete payout for injuries.
You can buy AD&D insurance as a rider on your life insurance policy or as a separate product for added income protection.
Accidental death and dismemberment insurance does not replace life or disability insurance.
AD&D insurance vs. life insurance
The difference between life and accidental death insurance lies in what event leads the insurer to disburse the policy’s death benefits.
Standard life insurance will pay your beneficiaries a set amount whether you die of natural causes, illness, injury, or other factors. This applies to both term and permanent life insurance.
On the other hand, accidental death insurance will only pay out if you die or suffer a life-altering injury due to an accident you did not cause.
Such injuries include dismemberment or loss of physical functions such as:
- Loss or impairment of a body part or its use
- Loss or impairment of vision, speech, or hearing
Basic Life Insurance does not issue any payout for injuries, whether accidental or self-inflicted.
What does AD&D insurance cover?
AD&D insurance typically covers work-related, home, or travel accidents, including vehicle accidents, falls, drowning, fires, suffocation, choking, or poisoning. Each policy details its coverage and limitations.
This insurance also provides financial protection if an accident happens on public transportation, including taxis, buses, commercial airplanes, trains, and cruise ships.
You or your beneficiaries will be entitled to benefits only if your death or injuries are directly caused by an accident. The injuries or death must happen within a specified time, typically within a few months of the accident date.
Optional AD&D benefits
Some insurers enhance their AD&D policies with optional benefits for these provisions:
- Accident hospital income
- Permanent total disability
- Critical burn
- Adaptive home and vehicle
- Accelerated death benefits
- Support for legal issues
- Funeral costs
- Bereavement counseling
What does AD&D insurance not cover?
AD&D insurance does not pay for any injury or death that happened before the policy became effective. It will not pay out for deaths caused by suicide or illness, including mental illness. Further, AD&D commonly excludes coverage for certain circumstances, including:
- Injury or death while driving under the influence of drugs or alcohol.
- Drug overdose
- Injury or death while participating in a riot or during an act of war.
- Injury or death while committing a criminal act.
- Injury or death while serving in the military.
- Injury or death while participating in extreme sports or lifestyle activities including skydiving, scuba diving, flying a plane, or car racing.
You might not qualify for AD&D insurance if you work a high-risk job such as law enforcement or rescue. Most life insurance policies maintain this exclusion as well.
Employee AD&D vs life insurance
Employee AD&D is a benefit that many companies offer employees to round out their employee benefits packages. It does not limit coverage to work-related misfortunes. In most cases, the insurance would issue a payout wherever a covered incident occurs.
Employee AD&D plans can be employer-paid or voluntary employee-paid.
Companies may extend eligibility to full and part-time employees. The insurance may also offer limited coverage for spouses and children.
Term life insurance vs AD&D
AD&D insurance generally carries a lower cost than standard term life insurance rates. Premium costs can vary according to the death benefit you choose and the information you provide on your application.
Term life insurance typically pays the policy’s face value when the insured dies. As double indemnity, AD&D can pay a benefit equal to or above the policy’s face value. Job-sponsored policies tend to base face value on the individual’s salary or a multiple.
Supplemental life insurance vs AD&D
Supplemental life insurance, also called voluntary life insurance, is an optional benefit available through employers and organizations for increased income protection. Workers can voluntarily pay for this policy as an addition to their employer-sponsored life insurance plan.
Under group plans, supplemental life insurance and AD&D often don’t require medical exams.
This insurance will pay a benefit in most cases of death that meet the policy’s stipulations. It is not limited to accidental causes. Neither will supplemental life insurance pay for nonfatal injuries.
AD&D insurance can be an economical tool to help deal with unexpected and unfortunate events at work, while traveling, or at home. It is inexpensive but quite limited in its coverage. AD&D is best as a part of your comprehensive income protection plan.
Does AD&D cover cancer?
AD&D does not cover cancer or any other disease leading to death. Most deaths are due to cancer and other illnesses, so this type of insurance offers no protection for dependents or final expenses. However, cancer insurance is available through private agencies. For many people, a basic life insurance policy provides sufficient coverage for all-cause mortality.
Should I pay for AD&D insurance?
Many employers provide their workers with AD&D insurance at no cost, so you might already have this coverage. Otherwise, you may find a policy with low premiums. The CDC reports that accidents are the fourth leading cause of death in the U.S., so you can decide if this extra coverage is worth it.
Do I need both life insurance and AD&D?
Purchasing an AD&D policy in addition to life insurance will provide more coverage for an accidental fatality or injury. AD&D can also provide funds in cases of accidental injuries, which standard life insurance does not. You may want to carry both types of insurance for added assurance. Purchasing an AD&D rider with a life insurance policy might be cheaper than buying a standalone AD&D policy.