Cost & Coverage
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AD&D insurance covers accidenal death and some injuries but isn't a replacement for life insurance.
Accidental death and dismemberment insurance 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 provides financial protection for your family in most cases of death. While there are a few potential caveats – like death by suicide during the first two years of coverage – you can rest assured that the policy benefit will be paid out in almost every instance.
But that isn’t the case with every type of insurance. Life insurance and accidental death and dismemberment (AD&D) insurance cover similar instances of death, but it’s important to know the difference between life insurance and AD&D to understand where AD&D coverage may not protect you.
In this article:
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Life insurance will pay out if you die by accident or illness, but accidental death and dismemberment (AD&D) insurance 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.
|AD&D Insurance||Life Insurance|
|Death by natural causes, sickness, or disease (heart attack, cancer)||No||Yes|
|Death by accident (car crash, airplane crash)||Yes||Yes|
|Death by drug overdose||No||Yes|
|Death by suicide||No||Yes***|
|Death by murder||Yes||Yes|
|Loss of limb, sight, hearing, or speech||Yes||No|
* Term life insurance policy only.
** Sample rates for $500,000, 30-year-term policies for a healthy 35-year-old.
*** Unless during first two years of coverage.
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 provides financial benefit 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 breadwinners provide for loved ones who rely on their income.
The most common types of life insurance are:
A term life insurance policy is the best option for most shoppers, because it’s affordable and straightforward.
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Life insurance is a good option for anyone who has people who rely on their income to pay off debts, make ends meet for everyday expenses, and plan for the future.
While life insurance is a smart purchase for most people, there are some instances when it’s not right.
As the name implies, and 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 in some instances of injury. While the full payout will come if you're killed in an accident, an accident resulting in injury may only pay out a portion of the benefit. Your policy will outline what portion of the benefit you'll receive for which injuries.
Accidental death and dismemberment insurance isn’t as important as other types of insurance, but still has a place for some financial protection plans:
Some insurance brokers try to push accidental death and dismemberment insurance as a substitute for life insurance, especially for young shoppers; since young people are more likely to die from accident than from illness or natural causes, the argument 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 their price for the term of the policy. What someone pays today is what they’ll pay in 20 years when they’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. Since life insurance gets more expensive as you age, you’ll end up paying much more for the policy.
Add that to the fact that life insurance covers more instances of death than AD&D insurance, for a comparable or cheaper price, and it’s clear that life insurance is the more valuable policy.
For someone who wants both life insurance and AD&D insurance, a rider is a viable option.
A 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; 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.
For shoppers who are more interested in coverage for the “dismemberment” portion of an AD&D policy, consider disability insurance. As with life insurance, AD&D insurance covers some of the same things disability insurance, but a proper disability policy is more thorough and covers illness and temporary disabilities.
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Yes, we have to include some legalese down here. Read it larger on our legal page. Policygenius Inc. (“Policygenius”) is a licensed independent insurance broker. Policygenius does not underwrite any insurance policy described on this website. The information provided on this site has been developed by Policygenius for general informational and educational purposes. We do our best efforts to ensure that this information is up-to-date and accurate. Any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application. Savings are estimated by comparing the highest and lowest price for a shopper in a given health class. For example: for a 30-year old non-smoker male in South Carolina with excellent health and a preferred plus health class, comparing quotes for a $500,000, 20-year term life policy, the price difference between the lowest and highest quotes is 60%. For that same shopper in New York, the price difference is 40%. Rates are subject to change and are valid as of 2/17/17.
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