What Is Accidental Death and Dismemberment Insurance? (AD&D)

Accidental death and dismemberment covers different scenarios than a life insurance product and is usually purchased as a rider to or part of a life insurance policy.  When comparing life insurance vs AD coverage, the primary difference is that a policyholder is insured against specified non-fatal accidents.

Many people combine life insurance with accidental death and dismemberment coverage to help provide additional benefits in case of an accidental death. This online guide on accidental death insurance can help you determine what type of policy and insurance company is right for you.

What is accidental death and dismemberment insurance? Accidental death and dismemberment coverage, or ‘AD&D’ for short, is normally added to a life insurance policy or as a rider. The policy covers scenarios in which the insurance policyholder is killed or injured, although a policy normally includes a detailed list of exclusions and limitations.

Depending on the policy features, AD&D insurance coverage may offer a double indemnity payout for a death claim. This means that if the accidental death insurance policyholder or a beneficiary makes a valid death claim, the payment value may be twice the policy face value.

The policy may indicate specific circumstances in which a claim will be payable as well as limitations on the insurance coverage, such as periods in which an accident must occur for the relevant benefit to be payable.

Stand-alone AD&D insurance policies may cover only deaths resulting from specific accidents such as fatal traffic accidents, falls from height, drowning, and exposure to extreme weather conditions. 

The dismemberment portion of the insurance provides a defined payment to the claimant following a defined serious accident. This may include a calculated percentage of the insurance policy value depending on the exact life impairment, such as:

• The loss of a limb or other body part
• Permanent or partial paralysis
• The loss of sight, speech, or hearing

Insurance coverage might, for example, provide a 100% payment if the insured person becomes permanently paralyzed or is killed, reducing to 50% if the policyholder loses sight in one eye. Exclusions may be wide-ranging.

AD&D insurance coverage may exclude deaths linked to substance misuse, recreational sports activities, and certain professions. Likewise, if an insured person becomes seriously injured when committing a crime, AD&D insurance coverage may not pay a benefit.

When applying for both standard life insurance coverage and AD&D insurance coverage, it is important to disclose your profession or any high-risk life activities, such as regular participation in contact sports; an omission may invalidate the insurance coverage.

AD&D is not an alternative to life insurance but rather an extra benefit under a life insurance policy. Typically, a death due to natural causes such as old age, heart disease, or cancer will be covered by life insurance but will not be eligible for an AD&D policy claim.

In contrast, AD&D insurance may provide supplementary coverage for scenarios that would not be claimable against a life insurance product. For instance, an AD&D insurance rider may cover the loss of a limb, particularly when the policyholder cannot work or drive.

Insured parties have a confirmed death benefit, payable to their named beneficiary when they pass away–provided no outstanding loans exist and all premiums rates have been paid. To summarize the positive aspects of whole life insurance:

The main advantage of AD&D policy coverage is that it may offer additional benefits for fatal accidents or serious injuries. Many people in higher-risk business professions may look to purchase AD&D insurance coverage to ensure their loved ones receive money and financial assistance if an accident occurs.

However, some insurance products may not be available to applicants in named professions, potentially including professional athletes and serving members of the military. Adding an AD&D rider to a life insurance policy may be an affordable way to add life protection.

The drawback is that AD&D life insurance policies include detailed lists of inclusions and exclusions and will not necessarily issue a payout for any accident. If the insurance policyholder dies from natural causes or is killed or suffers a serious impairment that is not included, they cannot reclaim the life policy premiums paid.

Policyholders should also recognize that AD&D coverage does not increase their total life coverage account value–this type of rider will only provide an insurance payout in exact scenarios and will not influence the accumulative account value of the underlying life insurance product.

Do I Need Both Life Insurance and AD&D?

Accidental death and dismemberment insurance can be purchased to supplement the coverage provided by your life insurance policy. It can also be a standalone type of insurance policy, sometimes used by people who would experience a substantial reduction in income should they become seriously injured.

While the right insurance solutions will always depend on your priorities and objectives, combining both types of life policy coverage may be beneficial. It helps ensure that your loved ones have a defined financial payout should anything happen to you, including a non-fatal covered accident that impairs your financial ability to provide for your family.

What Is the Difference Between Life Insurance and Accidental Death and Dismemberment?

The biggest contrast between these two insurance products is that accidental death coverage means just that–an incident or injury that could not have been anticipated and results in your death may be an insured event. Life insurance may provide a death benefit when the insured party passes away under other circumstances, although serious incidents, such as the loss of a limb or eyesight, may not be insured. 

What Are Examples of Accidental Death?

Insurance products can include caveats or conditions, but many accidental death policies will cover incidents such as an auto or motorcycle crash, accidental suffocation, a fall from height, unintentional poisoning, death due to a home fire, medical malpractice complications, industrial accidents, and fatalities linked to firearms, excluding suicide, deaths in combat or deaths resulting from the insured being intoxicated.

Is it Worth Paying More for Accidental Death and Dismemberment Coverage?

If you're comparing life insurance to accidental death coverage or trying to establish whether it would be beneficial to pay an additional premium to increase your coverage, the key aspect to consider is usually around the potential accidents or injuries you might experience and how you and your loved ones would manage financially.

For instance, you may have savings that would comfortably cover your long-term income if you could not work. However, if you would be reliant on credit cards, borrowing money from relatives or expensive loans to cover your general day-to-day living expenses if you become seriously injured, you may wish to consider putting additional protection in place.

An example might be the loss of a limb in a collision, which would not qualify for a payment from a standard life insurance product. Instead, an AD&D rider may provide a static payment value, or a payment based on a percentage of the face value of your life coverage.

Some insurance policies include a calculator within the terms that helps verify the payment associated with certain injuries or impairments.

Can I Purchase a Life Insurance Policy With AD&D Included?

Yes–some life insurance products may include an accident death coverage limit as standard, although this is more common in life coverage provided by an employer and may be specific to fatalities or serious injuries that occur in the workplace or business.

The more common scenario is that a life insurance applicant can choose to add an AD&D rider to their life policy at the point of purchase or as an extra rider later on. The exact cost depends on several variables, such as age, profession, health, and other factors, such as whether you drive a motorbike or participate in certain sports activities.

What Is Accidental Death and Dismemberment Insurance?

AD&D is either a feature of a life insurance product or an additional level of coverage that is tagged onto your life insurance policy as a rider. In short, this type of protection forms part of your long-term planning and will provide a financial payment to yourself or your nominated beneficiary if you become seriously injured or pass away in an accident.

Many families select an AD&D rider to cover their mortgage or loan repayments or when they are unsure whether their savings accounts would provide sufficient financial assistance to replace their income if they were to die or be unable to work.

Are There Specific Types of AD&D Insurance Targeted Towards Certain Professions?

You may come across life insurance products or standalone coverage designed for people at different stages of life, such as student policies or products for those in careers with a higher statistical chance of a serious accident. 

It is important to remember, when comparing life insurance vs accidental death coverage, that these policies pay out in different circumstances. The fatalities or injuries associated with an accidental death and dismemberment payment may not be covered by life insurance because even the most comprehensive policy may not cover non-fatal accidents.

This contrast is why many perceive that holding both life coverage and AD&D is the best approach to ensure they have financial protection in place across a broad range of potential scenarios.