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Life Insurance vs. AD&D: Both Terms Explained

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.

Key takeaways:

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
  • Paralysis
  • Death

Basic Life Insurance does not issue any payout for injuries, whether accidental or self-inflicted.

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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
  • Rehabilitation
  • Critical burn
  • Coma
  • Adaptive home and vehicle
  • Accelerated death benefits
  • Support for legal issues
  • Daycare
  • 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.

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