What Is Accidental Death and Dismemberment (AD&D) Insurance?

a car accident in the middle of the road

When thinking about insurance, people are more likely to think about life insurance than accidental death and dismemberment (AD&D) insurance. But it’s important coverage because accidents happen, even if you’re careful. AD&D pays a benefit if you have an accident that results in loss of life, limb, hearing or sight.

AD&D only covers certain deaths and accidents, so it isn’t a replacement for life insurance. But it can provide peace of mind for you and your family, especially if you are unable to qualify for life insurance. Here’s how to know if you need it.

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What Is Accidental Death and Dismemberment (AD&D) Insurance?

Accidental death and dismemberment (AD&D) insurance is a type of insurance that covers two types of accidents. The first “D” covers accidental death, such as if you die from a motor vehicle accident, fall, or drowning.

The second “D” in AD&D helps pay for medical bills or lost income if you suffer an accident resulting in loss of limb, hearing or sight.

AD&D is not life insurance. You typically buy coverage as a separate policy, but it’s sometimes available as an add-on to existing life insurance or health insurance coverage. However, it’s a supplemental type of policy.

Generally, experts advise that it is not a suitable replacement for term life insurance. But it can be especially useful for people whose health, family history or lifestyle factors make it difficult for them to qualify for a life insurance policy.

Related: What To Do If You’ve Been Denied Life Insurance

How Does AD&D Insurance Work?

AD&D insurance pays a lump sum if you are killed, dismembered or seriously injured in an accident. The amount of coverage available depends on your policy. Your coverage will include a schedule detailing the amounts or percentages of various benefits and the circumstances in which they apply.

For example, it can pay a claim if you die. You might receive 50% of the policy value if you lose a hand, foot or eye in an accident.

Policies ‌cover accidental injuries, death and dismemberment, but coverages can vary. Every policy is different, so it’s crucial that you understand what your policy covers (and what it doesn’t).

What Does AD&D Cover?

In the event of an accident, AD&D insurance pays out full benefits if you die and a portion of benefits if you are seriously injured. The most common causes of accidental deaths include:

  • Exposure to the elements
  • Car accidents
  • Falls
  • Travel accidents
  • Homicide
  • Drowning
  • Accidents involving heavy equipment

An injury could also trigger a payout. Policies typically cover accidental injuries, such as:

  • Loss of a limb or finger
  • Loss of sight, speech or hearing
  • Paralysis
  • Coma

What Does AD&D Not Cover?

Every policy has restrictions. AD&D insurance does not cover death caused by natural causes or illness. Policies also may exclude drinking and driving, suicide, drug overdose and risky activities like skydiving or car racing.

Read the fine print or check with your insurance provider to determine which circumstances your policy excludes.

Who Should Have AD&D Insurance?

Many people think they don’t need AD&D insurance since they’re young and healthy — until they get sick or injured. Still, it only pays out under specific circumstances, so it isn’t right for everyone.

If your workplace offers it as a benefit, you could get coverage at no cost to you. In that case, signing up for coverage is a simple decision.

Otherwise, it might require more consideration. According to the CDC, accidents only account for 5.4% of deaths in the U.S. But for people aged 25 to 44, accidents account for 30.2% of deaths. If you’re a young parent or have significant debt that could pass on to the next generation, AD&D may be a low-cost way to supplement your life insurance coverage.

You should consider AD&D insurance — or better yet, basic accidental death insurance — if you find you’re unable to qualify for traditional life insurance. Because it is not underwritten, it’s much easier to qualify for than life insurance.

Jake's Take

"You can pay more for policies that advertise as not needing a medical exam, but it’s worth shopping around, as you won’t always pay more for the convenience of skipping that step. Also, there is less of a price difference on smaller policies compared to bigger policies. And in some cases, especially for policies $500,000 or below, you may discover many options where there’s no extra cost at all."

Alternatives to AD&D Insurance

AD&D isn’t right for everyone. Consider these alternatives before you commit to purchasing a policy.

Life Insurance vs. Accidental Death and Dismemberment

The biggest distinction between AD&D and life insurance is that life insurance pays out for nearly all causes of death, while AD&D only covers accidental deaths. However, AD&D insurance also protects you if you suffer dismemberment or loss of a limb because of an accident. 

Life insurance is the best option for most people if you can only choose one type of coverage.

Disability Insurance vs. Accidental Death and Dismemberment

Disability insurance is an entirely different type of coverage. AD&D covers accidents, but it doesn’t cover disabilities you might suffer because of an accident or illness. For example, your AD&D policy won’t pay a benefit if you break your hand and can’t work for six months. But your disability insurance could cover your lost wages in that situation.

Do You Need Disability Insurance and AD&D?

Disability insurance and AD&D coverage have some overlap, but one is not a substitute for the other. The two policies can work together for better financial protection. For example, AD&D covers specific accidents only. It won’t cover a broken leg or illness that keeps you from working — but disability insurance can cover you in that situation.

Accidental Death vs. AD&D

A typical AD&D policy covers accidental death and dismemberment. Why would you want a policy that covers accidental death only? It’s a good question. 

An accidental death policy is less expensive than one that also includes dismemberment. But that isn’t the entire story — very few people claim dismemberment. It’s a very rare occurrence. Plus, the policy limits the types of accidents and dismemberment claims it will cover. 

You’d likely be better off getting an accidental death policy and a separate disability policy. That way, you’re covered for a wider range of disabilities (not just ones related to dismemberment).

Pros and Cons of AD&D Insurance

AD&D is good insurance to have, but it protects few circumstances. It can provide a false sense of security if you don’t have the right life insurance in place. Here’s what to consider before you purchase a policy. 

Is AD&D Worth It?

If you are a risk taker, someone who loves to go out and play sports, or just someone who likes to live life to the fullest, you can benefit from AD&D insurance. It’s generally inexpensive. How much you pay can vary, but the cost of a policy will typically range from $7 to $10 per month for each $100,000 of coverage. 

Life is unpredictable, and anything can happen‌. If something happens to you unexpectedly, you could leave your family with crushing debt from hospital bills and funeral expenses if they don’t have any other resources available to them.

AD&D policies help protect your family from this kind of financial hardship so they can focus on taking care of you instead of worrying about how to pay for it. Get a free quote and qualify for instant coverage without a medical exam today!

FAQ: Accidental Death and Dismemberment Insurance

Disclaimer: The comments, opinions, and analyses expressed at Everyday Life are for informational purposes only and should not be considered individual investment, legal or tax advice.

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