Accidental death and dismemberment insurance (AD&D) is a type of life insurance policy, or a rider to an existing policy, that only pays cash benefits in the case of death or serious injury in a covered accident. This means there is no death benefit if you die of natural causes. In general, AD&D insurance is meant to supplement life insurance, not replace traditional life insurance coverage.
According to the Centers for Disease Control and Prevention (CDC), the overall leading cause of death in the United States is heart disease, while accidental death is the fourth leading cause. However, if you’re under the age of 44, the number one cause of death is by accident, which can make accidental death insurance seem like a smart move.
But if you already have term life insurance or another traditional life insurance policy, you might be wondering if you need accidental death and dismemberment insurance too. Read on to learn more about AD&D life insurance policies, what they do and don’t cover, and if adding an AD&D policy makes sense for you.
What is accidental death and dismemberment insurance?
As the name implies, accidental death and dismemberment insurance (AD&D) policies pay only in the event of a death or very serious injury caused by an accident. Dismemberment includes both the actual loss of body parts and/or the loss of the use of certain body parts, such as paralysis, loss of sight, or the loss of a limb.
How accidental death and dismemberment insurance pays out
An AD&D life insurance policy pays out when a covered accident occurs. Usually, if the covered accident results in death, the policy will pay 100% of the face value of the policy to the designated beneficiaries.
If the accident does not result in death, the cash benefit may be reduced to perhaps 50% of the coverage purchased, and the policyholder will receive those as living benefits. Living benefits could also result in a payout of the full cash benefit depending on the severity of the covered accident.
If you have permanent life insurance in addition to AD&D coverage, your beneficiaries can receive up to double coverage amounts from your original life insurance policy. For example, if you have $1 million in your primary life insurance policy and $1 million in AD&D coverage and you die in a covered accident, your beneficiaries could claim up to $2 million in death benefits.
What does AD&D life insurance cover?
Policies vary from one insurer to the next but, in general, only specific situations are included with accidental death and dismemberment coverage.
- Motor vehicle accidents
- A plane crash
- Workplace death or injuries
- Exposure to elements (e.g., hypothermia)
- Fire-related deaths or injuries
- Accidental overdose
What is not covered by accidental death and dismemberment insurance?
Unfortunately, an AD&D life insurance policy doesn’t cover deaths and serious injuries in every case. Exclusions of accidental deaths or injuries with AD&D coverage often include:
- Suicide or self-inflicted injuries
- Death or injuries playing professional sports
- Death by voluntarily inhaling gas or poison
- Deaths or injuries from risky activities like scuba diving, car racing, or base jumping, for example
- War injuries or wartime deaths, including terrorist acts
- Accidents that happen as a result of drug and alcohol use
- Accidents that occur while committing a crime
- Natural causes or illnesses
Advantages and disadvantages of AD&D insurance
The most obvious benefit to carrying AD&D life insurance, like with all types of life insurance is the death benefit paid to beneficiaries to help them financially survive an already tragic time. Or, in the case of a debilitating injury, it’s a way to replace lost income if one is unable to work.
However, if you already have a permanent life insurance policy, AD&D may be an unnecessary added expense. And if you die by illness or other natural causes, like most people, it can end up being a waste of money that might have been put to better use.
Still, if it’s offered by your place of work at no, or very little, cost it can be a nice supplement to your other life insurance and will provide additional benefits to your family if your death is caused by a terrible accident.
Here is a list of the benefits and drawbacks to consider.
- Provides benefits coverage in the event of accidental death or dismemberment
- Less expensive than permanent life insurance
- Medical history doesn’t affect coverage approval
- Coverage amounts are usually effective immediately
- Limited coverage — many types of accidents not covered by AD&D
- No payout for deaths by natural causes
- If AD&D is part of employment coverage, you’ll lose it if you leave
- May not qualify for an independent AD&D policy if you have a high-risk job
How to get accidental death and dismemberment insurance
Many companies and organizations offer accidental death and dismemberment insurance as part of a group life insurance plan. You can also purchase it on your own through a life insurance agent or even through many banks or credit unions.
If you’re purchasing a stand-alone AD&D policy, often called a voluntary AD&D policy, you can get coverage pretty much immediately as long as you are within the age requirements (usually between 18 and 70 or 80 years of age). There should be no waiting period or medical exams before coverage can begin.
If you want to add an AD&D rider to your regular life insurance policy, you may need to add it at the time you purchase your permanent life insurance policy. Check with your insurance agent first if this is something you are interested in.
AD&D rider vs. stand-alone policy
If your company doesn’t offer life insurance or AD&D coverage as part of its benefits package, you might be wondering if you should purchase AD&D on your own or as an add-on to a regular life insurance policy.
“For some individuals, it may be a wise decision to own a [stand-alone] AD&D policy, and not have it ‘tied’ to an existing life insurance policy via a rider. We often see that a rider may be more expensive, and offers a lower amount of AD&D coverage compared to obtaining an outside policy” explains Matt Schmidt, owner and agent at Diabetes Life Solutions.
“This obviously will vary from insurance provider to provider. Because of this, you would definitely wish to compare the pricing of both types of options.”
Is accidental death insurance worth it?
As with all life insurance policies, you’ll want to consider the life insurance coverage amount you can afford based on your budget and who and what that coverage needs to pay for.
For example, if you die suddenly, will the death benefit need to cover lost wages plus a hefty mortgage and other debts and expenses? Do you have dependent children? Does your firm provide life insurance and how much is the death benefit? These are situations you should consider before you buy.
“Since an AD&D policy is pretty inexpensive, it might provide you with additional peace of mind to have a plan like this in your insurance portfolio,” Schmidt says. “Especially if the amount of life insurance you own is a lower amount, laddering an inexpensive AD&D policy might be a good idea.”
Why doesn’t AD&D life insurance require a medical exam?
In most cases, medical exams aren’t required to purchase AD&D life insurance. This is because AD&D only covers you if you die or are injured by specific accidents. This is different from permanent or term life insurance where insurance companies have to pay a death benefit no matter how you die (with certain rare restrictions).
Statistically speaking, most people die of natural causes or illnesses, so the chances of an insurance company having to pay out on an AD&D policy are relatively low by comparison to permanent life insurance policies. This is also why they’re less expensive.
Is a heart attack covered by an accidental death and dismemberment insurance policy?
In general, a heart attack, even though it’s often sudden, is considered dying of natural causes. However, if an accident causes the heart attack, an AD&D policy may still pay out a death benefit.
For example, if a person is injured during a fall from a ladder and then suffers a heart attack as a result of those injuries, AD&D coverage will most likely pay out the full cash benefits.
- Accidental death and dismemberment insurance pays out a death benefit only in situations where the death or dismemberment occurs as a result of an accident. Covered accidents are limited by your specific policy’s coverage.
- Dismemberment is defined as the loss, or loss of use, of a body part, such as blindness, paralysis, or loss of a limb.
- AD&D life insurance can be purchased as a stand-alone policy or as a rider (add-on) to regular life insurance.
- In general, AD&D life insurance coverage is not meant to replace the coverage you get from a term life insurance or other traditional life insurance policy.
- Many employers, organizations, and state agencies offer AD&D coverage as part of their comprehensive benefits package.
View Article Sources
- Leading Causes of Death — Centers for Disease Control and Prevention
- Death by Demographics | Age and Cause — National Safety Council
- Accidental Death & Dismemberment — Vanderbilt University
- Accidental Death & Dismemberment (AD&D) Insurance — University of Illinois System
- I Need Life Insurance. What Kind of Life Insurance Should I Buy? — SuperMoney
- What Does Life Insurance Cover? — SuperMoney
- The Differences Between Whole and Term Life Insurance — SuperMoney
- What Are The Different Types of Life Insurance? — SuperMoney
- Guaranteed Life Insurance: Should You Buy It? Pros and Cons — SuperMoney
- What is Term Life Insurance? And Why Is Everyone Suddenly Interested — SuperMoney
- Best Life Insurance — SuperMoney
- Best Term Life Insurance — SuperMoney
- Ladder — SuperMoney
- Everyday Life Insurance — SuperMoney