How accidental death & dismemberment insurance (AD&D) works

AD&D insurance pays out a death benefit if you are seriously injured or die from an accident.

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Tory CrowleyAssociate Editor & Licensed Life Insurance AgentTory Crowley is an associate life insurance and annuities editor and a licensed insurance agent at Policygenius. Previously, she worked directly with clients at Policygenius, advising nearly 3,000 of them on life insurance options. She has also worked at the Daily News and various nonprofit organizations.&Rebecca ShoenthalEditor & Licensed Life Insurance ExpertRebecca Shoenthal is a licensed life, disability, and health insurance expert and a former editor at Policygenius. Her insights about life insurance and finance have appeared in The Wall Street Journal, Fox Business, The Balance, HerMoney, SBLI, and John Hancock.

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Kristi Sullivan, CFP®Kristi Sullivan, CFP®Certified Financial PlannerKristi Sullivan, CFP®, is a certified financial planner and a member of the Financial Review Council at Policygenius. Previously, she was a regional consultant at Fidelity Investments for nine years.

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Accidental Death and Dismemberment (AD&D) provides financial protection in case you are involved in an accident that causes death or dismemberment. AD&D insurance is often offered by employers as an alternative to life insurance.

However, because AD&D insurance isn’t nearly as robust as life insurance, it shouldn’t completely replace your life insurance coverage.

AD&D policies are generally cost-effective. If you do need accidental death and dismemberment coverage, it’s best to have separate AD&D and life insurance policies. In most cases, you can also add an AD&D rider to your life insurance policy.

What is accidental death and dismemberment insurance?

AD&D pays out if you die in an accident (the accidental death part of the policy) or if an accident causes you to lose a hand, foot, or limb (the dismemberment part of the policy).

Because AD&D only pays out under specific circumstances, it’s not a sufficient form of life insurance. Whereas AD&D insurance only pays out if you’re injured or killed in an accident, life insurance pays out for most causes of death

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

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What does accidental death and dismemberment insurance cover?

AD&D insurance generally covers:

  • Death in an accident, like a car crash or by drowning

  • Death by murder

  • Loss of limb or finger

  • Loss of sight, hearing, or speech

If you’re 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 your policy.

What doesn’t accidental death and dismemberment insurance cover?

AD&D policies have a number of exclusions for accidents. For example, it won’t pay a benefit if your death is the result of something going wrong during a surgery. Individual states 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:

  • Activities considered high risk by insurers, such as skydiving

  • Drug overdose

  • Drunk driving

  • Illness, such as a heart attack

  • Natural causes

  • Suicide

At the end of the day, an AD&D insurance policy won’t pay out for most causes of death. Policies will only pay out from accidents. 

The cost of AD&D insurance 

An AD&D policy usually costs $7 to $10 per month per $100,000 of coverage, but how much you actually pay for AD&D insurance depends on your age. The older you are, the higher your premiums — much like most other types of insurance. 

Regardless, AD&D insurance tends to cost less than a traditional term life insurance policy — but comes with the caveat of coverage limitations and a big chance that your family won’t ever receive the benefit.

There’s a high likelihood that traditional life insurance will pay out compared to an AD&D policy, so a traditional term life insurance policy generally offers more value for its cost.

→ Average life insurance cost per month

Who needs accidental death and dismemberment insurance?

AD&D insurance is best suited for anyone on a tight budget with dependents who would financially suffer in the event of your impairment or death.

It can be a valuable financial safeguard if you cannot afford traditional life insurance, as it costs less. There is no medical underwriting, and anyone can buy a policy as long as they meet age requirements.

Alternatives to AD&D insurance

The best alternative to a standalone AD&D insurance plan on top of your insurance policies is an AD&D rider that you can add on to your life insurance policy for an extra fee.

The AD&D rider offers a bigger payout than 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 but do not die. 

Costs of accidental death benefit riders vary by insurance company and policy, but $50,000 of coverage would likely cost less than $100 extra per year, or about $8 per month — which isn’t that much more than a standalone policy. 

Is AD&D insurance worth it?

As a standalone policy, AD&D insurance doesn’t provide robust enough coverage. Life insurance and disability insurance provide better security and don’t have payout limitations like AD&D insurance does.

If you can afford it, adding a supplemental AD&D rider to your life insurance policy creates even more comprehensive coverage that would pay out even if you survived an accident. 

But if you’re unable to afford a traditional life insurance policy, AD&D insurance is a good alternative. Because of its low cost, it ensures that you have at least some coverage to financially protect your family if you become impaired or die in an accident.

Authors

Tory Crowley is an associate life insurance and annuities editor and a licensed insurance agent at Policygenius. Previously, she worked directly with clients at Policygenius, advising nearly 3,000 of them on life insurance options. She has also worked at the Daily News and various nonprofit organizations.

Rebecca Shoenthal is a licensed life, disability, and health insurance expert and a former editor at Policygenius. Her insights about life insurance and finance have appeared in The Wall Street Journal, Fox Business, The Balance, HerMoney, SBLI, and John Hancock.

Expert reviewer

Kristi Sullivan, CFP®, is a certified financial planner and a member of the Financial Review Council at Policygenius. Previously, she was a regional consultant at Fidelity Investments for nine years.

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