Accidental death and dismemberment insurance (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.

What is accidental death and dismemberment insurance?

Accidental death and dismemberment insurance (or AD&D) insurance is a policy that covers only accidents and typically has a much lower payout than a life insurance policy.

AD&D 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 hand, foot, or limb in an accident.

Can AD&D replace life insurance?

Some people like to use accidental death insurance as an alternative to life insurance because getting coverage is inexpensive and it covers you in the case of accidents. However, an AD&D policy is not a good alternative to life insurance, which covers you no matter how you die and is usually cheaper in the long run.

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

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).

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 in 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 a number 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:

• High risk activities, such as skydiving

• Drug overdose

• Drunk driving

• Illness, such as a heart attack

• Natural causes

• Suicide

Because dying from a natural cause or high risk activities aren’t considered accidents an AD&D insurance policy will not pay out for them.

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 can be a valuable financial safeguard if you cannot afford traditional life or disability insurance, as it generally offers lower coverage amounts — meaning it costs less

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.

The cost of AD&D vs. term life

Methodology: Term life insurance rate is calculated for a male non-smoker in Columbus, Ohio, obtaining a 20-year, $500,000 term life insurance policy. Quotes are based on a composite of policies from AIG, Banner, Brighthouse, Lincoln, Mutual of Omaha, Pacific Life, Principal, Protective, Prudential, SBLI, and Transamerica and may vary by carrier, term, coverage amount, health class, and state. Not all policies are available in all states. Rate illustration valid as of 1/11/2021. AD&D rate is for a 35-year old male in Ohio, with a $500K policy issued by Mutual of Omaha (Omaha, NE). Individual rate will vary as eligibility and availability will affect each customer’s rate. Rate illustration valid as of 1/11/2021.

Other alternatives to accidental death and dismemberment insurance

Accident insurance

Accident insurance is 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 a serious injury to get the benefit. Instead, your policy will list what kind of payout different types of injury are worth. Accident insurance policies also pay out for accidental death.

Disability insurance

Disability insurance works by replacing a portion of your income when you’re unable to work. It’s 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.