Life insurance vs. accidental death & dismemberment insurance

AD&D insurance covers accidental death and injuries, but isn't a good replacement for life insurance.

What’s the difference between life insurance and AD&D?

Life insurance provides financial protection for your family in most cases of death and will pay out if you die by accident or illness. Accidental death and dismemberment (AD&D) insurance, on the other hand, only pays out in certain instances of death by accident, but not for natural causes or illness. It also provides benefits for some non-death accidents, such as losing a limb or digit.

Life insurance and AD&D insurance overlap slightly and cover similar instances of death, but it’s important to know the difference between the two to understand when AD&D coverage may not protect you.

We weighed the pros and cons of life insurance vs. AD&D based on what each actually covers, how much they cost and how easy they are to get. For most people, we recommend life insurance over AD&D coverage because it’s comparable in price and covers more causes of death.

KEY TAKEAWAYS

  • Accidental death and dismemberment insurance (AD&D) does not cover death from natural causes

  • Life insurance offers more coverage for a comparable price

  • AD&D should never be a substitute for term life insurance

Life insurance vs. AD&D: Coverage comparison

CIRCUMSTANCETERM LIFE INSURANCEAD&D INSURANCETERM LIFE INSURANCE WITH AN AD&D RIDER
Expires?YesYesYes
Cost$29.09$12.95$50.65
Death by natural causes, sickness, or diseaseYesNoYes
Death by drug overdoseYesNoYes
Death by suicideYesNoYes
Death by accident (car crash, airplane crash)YesYesYes
Death by murderYesYesYes
Loss of limb, sight, hearing, or speechNoYesYes

Methodology

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We calculated the average monthly premium for 35-year-old non-smoking males with Preferred health ratings for a $500,000, 20-year term life insurance policy in Ohio based on a composite of policies offered by Policygenius from AIG, Banner, Brighthouse, Lincoln, Mutual of Omaha, Pacific Life, Principal, Protective, Prudential, SBLI, and Transamerica. The average monthly premium for a term policy with an accidental death and dismemberment rider is based upon the same profile, based on rates from four carriers offering that coverage through Policygenius, including AIG, Mutual of Omaha, Prudential, and Transamerica. Referenced policies may vary by carrier. Not all policies are available in all states. AD&D rate is for a 35-year old male in Ohio, with a $500K policy issued by Mutual of Omaha (Omaha, NE). Individual rates will vary as eligibility and availability will affect each customer’s rate. Rate illustration valid as of 1/11/2021.

Note that AD&D insurance has some exclusions, including injuries sustained before coverage and death while participating in riots. Each state may have its own exclusions for what AD&D insurance will cover.

Life insurance basics

Life insurance provides financial protection to loved ones if the policyholder dies. Premiums are paid on a monthly or annual basis, and the death benefit is paid out to named beneficiaries. Life insurance helps provide for loved ones who rely on their income.

The most common types of life insurance are:

  • Term life insurance – Expires after a number of years outlined in the policy.

  • Whole life insurance – A type of permanent life insurance; remains active as long as premiums are paid, and contains an investment-style cash value.

A term life insurance policy is the best option for most shoppers, because it’s affordable and straightforward.

Pros and cons of life insurance

Life insurance is a good option for anyone who has dependents who rely on their income, but it’s not the right option for every situation.

PROSCONS
Pays a tax-free death benefit if the policyholder diesCan be costly for older or unhealthy people
More affordable than other financial protection productsWhole life insurance is a poor investment option

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Accidental death and dismemberment (AD&D) insurance basics

As the name implies, an AD&D policy covers death from accidents. That means it doesn't cover death from natural causes like old age, or deaths from terminal illnesses.

AD&D insurance will also pay out some of the benefit in some instances of injury or accidental loss of limbs. While you will receive the full death benefit if you're killed in an accident, an accident resulting in an injury may pay out a portion of the benefit. Your policy will outline how much of the benefit you'll receive for different types of injuries.

Pros and cons of AD&D insurance

Accidental death and dismemberment insurance provides less coverage than other types of insurance, but it still fits into a broader financial protection plan.

PROSCONS
Offers additional protection on top of life and disability insuranceMore limited coverage than life insurance
Pays a benefit for injuries, not just deathMore common as a rider than a standalone policy

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Do you need AD&D insurance if you have life insurance?

Some insurance brokers position accidental death and dismemberment insurance as a substitute for life insurance, especially to young shoppers. Because young people are more likely to die from an accident than from illness or natural causes, the thought is that AD&D insurance is the smarter buy.

However, AD&D insurance is not a substitute for life insurance. Part of life insurance is planning for the future; a 30-year-old may not need a $500,000 life insurance policy today, but they lock in the lower price for the term of the policy. Life insurance gets costlier as you age, but if you buy it now, the affordable rates you pay today are what you’ll pay in 20 years when you’re more likely to need life insurance.

Meanwhile, if you rely on AD&D insurance for 20 years, you’ll need to buy a life insurance policy when you’re older and when you’ll likely end up paying much more for the policy.

Additionally, life insurance covers more instances of death than AD&D insurance, for a comparable or cheaper price, so it’s clear that life insurance is the more valuable policy.

Accidental death and dismemberment riders

For someone who wants both life insurance and AD&D insurance, a rider is a viable option.

A life insurance rider is an addendum to a policy that provides additional coverage. An AD&D rider pays out an extra amount if death is due to an accident, but if the death is from natural causes, the policy simply pays out the base amount.

Ask an expert if the life insurance company you've chosen offers an AD&D rider.

The bottom line: AD&D insurance vs. life insurance

Life insurance is the best choice for most shoppers because it covers more causes of death and is as affordable as accidental death & dismemberment insurance. AD&D can leave you without protection if you die from natural causes, sickness, disease, drug overdose or suicide. For those looking for the best of both worlds, adding on an AD&D rider to your life insurance policy is a better option than AD&D insurance alone.

Life insurance vs. AD&D insurance FAQ:

What is the difference between life insurance and AD&D?

Life insurance pays a tax-free benefit to your beneficiaries if you die, whereas AD&D pays out to your beneficiaries if you die or are injured in an accident.

Do I need both life insurance and AD&D?

Most people only need life insurance, which covers more causes of death than AD&D and is equally or more affordable.

Is AD&D insurance worth it?

Most people don’t need AD&D as a standalone policy. If you’d like some coverage for accidental injuries, an AD&D rider or standalone disability policy are better choices.