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Accidental death and dismemberment insurance (AD&D)

A policy that only pays out if you are seriously injured in or die from an accident.

Nupur Gambhir

Nupur Gambhir

Published September 11, 2020

KEY TAKEAWAYS

  • Accidental death and dismemberment insurance (AD&D insurance) pays a benefit if you die or are seriously injured as a result of an accident

  • An AD&D policy usually costs $7 to $10 per month per $100,000 of coverage

  • Accept any free coverage from an employer, but term life insurance is cheaper in the long run and covers a lot more than AD&D

Accidental death and dismemberment insurance, also called AD&D insurance or accidental death insurance is a type of insurance that pays out a benefit if you are injured or killed in certain accidents.

AD&D insurance is generally inexpensive, and it’s common for employers to offer a small policy to their employees as an alternative to life insurance. However, AD&D coverage isn’t nearly as robust as life insurance and it isn’t a good alternative. If you can afford it, AD&D insurance should supplement your life insurance policy or you should add on an AD&D rider.

IN THIS ARTICLE

What is accidental death and dismemberment insurance?

AD&D insurance is not life insurance. It is an alternative option to life insurance that covers only accidents and typically has a much lower payout than a life insurance policy.

Accidental death and dismemberment insurance is actually two types of coverage in one policy. It includes an accidental death policy, which pays out when you die in an accident, and a dismemberment policy, which is a type of accident insurance that pays out if you lose a limb or digit in an accident.

AD&D vs. life insurance

Accidental death insurance is sometimes seen as an alternative to life insurance because getting coverage is inexpensive and it covers you in the case of accidents. An AD&D policy is not a good alternative to life insurance, though. Life insurance covers you no matter how you die and is probably cheaper in the long run.

→ Find more information about the difference between life insurance and AD&D insurance

What does accidental death and dismemberment insurance cover?

AD&D insurance generally covers:

  • Death in an accident, like a car crash or airplane crash
  • Death by murder
  • Loss of limb or finger
  • Loss of sight, hearing, or speech

If you are injured or killed by an accident, you or your family can make a claim with your insurance company. The insurer will then pay a benefit amount based on your injuries (or death), as listed in the policy.

What does accidental death and dismemberment insurance not cover?

AD&D policies have lots of exclusions. For example, it won’t pay a benefit if your death is the result of a surgery or a crime you were committing. Individual states may also have their own exclusions to AD&D coverage.

AD&D insurance won't pay out if you die in one of the following ways:

  • Dangerous activities, such as skydiving
  • Drug overdose
  • Drunk driving
  • Illness, such as a heart attack
  • Natural causes
  • Suicide

AD&D insurance primarily pays out for deaths that occur by unexpected accidents. Because dying from a natural cause or skydiving aren’t considered accidents — natural causes are expected and you assume some level of risk when you skydive — AD&D insurance will not pay out for them. Life insurance pays out for more causes of death than AD&D insurance.

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Who needs accidental death and dismemberment insurance?

AD&D insurance is best suited for anyone with dependents who would financially suffer in the event of your impairment or death but is also on a tight budget. It generally offers lower coverage amounts — meaning it costs less than traditional life or disability insurance — making it a valuable financial safeguard if you cannot afford traditional life or disability insurance. Likewise, if you don't qualify for a traditional life or disability insurance policy, getting AD&D insurance is almost guaranteed, which ensures that you at least have some coverage if you're in an accident.

However, AD&D insurance doesn't offer adequate coverage for most people and is best used to supplement a traditional life and disability insurance policy. Because it pays out for fewer causes of death or disability, it isn’t the safest option for standalone coverage.

AD&D riders

A standalone AD&D policy doesn’t usually make sense but many life insurance companies offer an optional accidental death and dismemberment rider that you can add to your insurance policy for an extra fee.

A rider is an add-on that allows you to get additional coverage or tailor an insurance policy to your specific needs. The AD&D rider offers a payout beyond your standard death benefit if your cause of death is an accident that the rider covers. The rider will also pay a set amount if you lose a limb or digit from a covered accident type.

Costs of accidental death benefit riders vary by carrier and policy, but $50,000 of coverage would likely cost less than $100 extra per year (about $8 per month).

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The cost of AD&D insurance

How much you pay for AD&D insurance will depend on your age. The older you are, the costlier your premiums will be. At any age, AD&D insurance tends to cost less than a traditional term life insurance policy, but comes with coverage limitations and pays out for fewer causes of death. Because of the likelihood that a life insurance policy will cover your cause of death and an AD&D policy won’t, a traditional term life insurance policy offers more value.

AD&D insurance vs. term life insurance

POLICY TYPEAGES COVEREDMONTHLY PREMIUMLIFETIME COST OF POLICY
Term life insurance35 to 65$43.56$15,681
AD&D insurance35 to 65$35$12,600

The above information is based on quote averages of policies offered by Policygenius as of September 2020. Quotes provided by our 11 partner life insurance companies: AIG, Banner, Brighthouse, Lincoln, Mutual of Omaha, Pacific Life, Principal, Protective, Prudential, SBLI, and Transamerica.

AD&D insurance vs. AD&D riders

The cost of AD&D riders is determined by your occupation and hobbies. Adding an AD&D rider onto your term life insurance policy will usually tack on a few extra dollars to premiums, though this could be more if you’re extra adventurous. Because AD&D insurance policies are comparable in cost to traditional term life insurance policies, you’ll spend less by getting life insurance and adding an AD&D rider as opposed to getting two separate policies.

Other alternatives to accidental death and dismemberment insurance

Accident insurance

Accident insurance is another type of insurance that’s similar to accidental death and dismemberment insurance. Also called supplemental accident insurance or personal accident insurance, it pays out a lump sum if you sustain any type of accidental injury. Unlike AD&D insurance, you do not need to sustain a serious injury to get the benefit. Your policy will list what each type of injury is worth. Accident insurance policies also pay out for accidental death.

Disability insurance

Another alternative to consider is disability insurance. Disability insurance works by replacing a portion of your income when you’re unable to work.

Disability insurance is worth consideration as a standalone policy or in conjunction with a life insurance policy because more than one in four workers will become disabled before they retire, according to the Council for Disability Awareness. Illness is also a more common cause of disability than injury, so disability insurance is more likely to cover you than AD&D.

Is AD&D insurance worth it?

As a standalone policy, AD&D insurance doesn't provide the robust coverage most people need. Life insurance and disability insurance provide better security and don’t have payout limitations like AD&D does. If you can afford it, adding a supplemental AD&D insurance policy to your life or disability insurance policies can create even more comprehensive coverage. If multiple policies aren’t feasible, you can add on an AD&D rider to your life insurance policy.

But if you're unable to get a traditional life or disability insurance policy, AD&D insurance can be a good alternative. Because there is no medical exam involved and there are minimal disqualifiers to getting a policy, it ensures that you have at least some coverage to protect your loved ones if you're impaired or die in an accident.

AD&D insurance FAQ

What is accidental death and dismemberment insurance?

AD&D insurance pays out a lump sum to your loved ones if you’re impaired or die in a qualifying accident.

What does accidental death and dismemberment insurance cover?

Death in a murder or an accident or loss of a finger, limb, hearing, sight, or speech are all covered by AD&D insurance.

How does accidental death and dismemberment insurance compare to life insurance?

Life insurance pays out for more causes of death than AD&D insurance. While an AD&D policy only covers qualifying accidents, life insurance will pay out for most causes of death if there is no proof of fraud and the death was not by suicide within the first two years of the policy.

Is accidental death and dismemberment insurance worth it?

As a standalone insurance policy, AD&D insurance does not provide the coverage most people need and is not worth the premiums. Instead, it should be used to supplement your life and disability insurance policies. But if you do not qualify for a traditional life insurance policy, AD&D insurance is a good alternative.

About the author

Insurance Expert

Nupur Gambhir

Insurance Expert

Nupur Gambhir is an insurance editor at Policygenius in New York City. Previously, she has worked in marketing and business development for travel and tech. She has a B.A. in Economics from Ohio State University.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

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