What Is Accidental Death & Dismemberment Insurance?

Accidental death and dismemberment insurance provides a financial benefit if the insured is killed in an accident. Unlike standard life insurance, the insured may receive a partial benefit if they survived the accident but suffered a severe injury like the loss of a limb or paralysis.

Read to see how AD&D insurance differs from life insurance and how you can get covered.

On This Page

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  How Does AD&D Insurance Work?

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  What Does AD&D Insurance Cover?

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  How Much Does AD&D Insurance Cost?

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  What’s the Difference Between Life Insurance and AD&D?

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  What Are the Pros and Cons of AD&D Insurance?

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  Is AD&D Insurance Worth It?

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  How Do I Get AD&D Insurance?

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  FAQs

How Does AD&D Insurance Work?

Accidental death and dismemberment insurance is a type of life insurance that pays a benefit to the beneficiary if the insured dies from a random and unforeseen circumstance or is severely injured, causing the loss of a limb or severe impairment to their physical being.

For example, say you’re walking down the street and some scaffolding breaks and drops a piano on your head. The impact was fatal. Due to this accidental death, a benefit would be paid to your beneficiary.

If the insured dies and the death is covered, the beneficiary receives the full benefit amount. If the insured suffers dismemberment, the policy will pay a partial benefit — usually half but this can vary based on the injury severity.

For example, if you lose a leg in a covered accident, you'll receive 50% of the payout.^[1] If you lost both legs, you would receive 100%. Sun Life Financial lends some insight into how benefits would be paid out based on the type of injury.^[2]

What Does AD&D Insurance Cover?

Accidental death and dismemberment insurance pays out a benefit to the beneficiary if the insured person dies due to a covered accident or if the insured person suffers the loss of a limb, sight, hearing or speech.

Accidental Death

Accidental death is defined as a death that occurs as a direct result of a covered accident. A covered accident is an event that is sudden, unexpected and unintended and that results in a bodily injury to the insured person that directly causes their death.

Erisa Insurance lists the following examples of accidental deaths:^[4]

• Motor vehicle accidents, including those involving public transportation
• Falls
• Poisoning
• Drowning, with the exception of that which occurs as the result of a natural disaster
• Fire-related deaths, including those that involve burns, asphyxiation, or falling objects in the fire
• Suffocation
• Firearms, excluding firearm deaths resulting from combat or suicide
• Industrial accidents involving explosions, mining accidents, equipment malfunctions, and other work-related accidents
• Complications arising from medical malpractice
• Air, train, or water transport accidents

Additionally, someone is still covered if they don’t die immediately after an accident. For example, if someone is in a car accident and is taken to the hospital but later dies from their injuries, their beneficiary may still be eligible for the death benefit.

It is important to note that accidental death and dismemberment insurance typically does not cover deaths resulting from participating in high-risk activities such as skydiving or bungee jumping. However, some carriers will permit coverage for high-risk activities provided the insured pays a higher premium.

Dismemberment

Dismemberment refers to the loss of a limb, sight, hearing or speech due to a covered accident. As stated earlier, the policy may pay out a partial benefit if the insured person suffers the loss of one limb or the loss of sight or hearing in one ear or eye. Alternatively, you could receive a full payout if you survive but suffer complete loss of hearing or sight or you lose multiple limbs. Coverage usually includes partial or full paralysis, as well.

What Isn’t Covered by AD&D Insurance?

While AD&D insurance covers accidental death and dismemberment resulting from an accident, there are certain situations that are typically not covered. These include deaths or injuries resulting from or sustained while:

• Natural causes such as illness or disease
• Suicide
• Self-inflicted injuries
• Under the influence of drugs or alcohol
• Committing a crime
• Certain hazardous activities, such as skydiving or bungee jumping (coverage may be available by paying a higher premium)

How Much Does AD&D Insurance Cost?

Accidental death and dismemberment insurance can cost as low as $4.50 per $100,000 of coverage or $25 per $500,000 of coverage.^[5] The cost of accidental death and dismemberment insurance varies depending on several factors, including:

• Age: The older you are, the more prone you are to accidents, which means you will pay more for coverage due to being at a higher risk.
• Occupation: Those who work high-risk occupations like construction or transportation may pay higher premiums.
• Coverage amount: Increasing your coverage limits will increase your premiums as a result.

What’s the Difference Between Life Insurance and AD&D?

While AD&D insurance and life insurance are both designed to provide financial protection to your loved ones in the event of your death, there are some key differences between the two. The following table outlines some of the main differences:

If you're looking for comprehensive coverage that will provide financial protection for your loved ones no matter how you die, life insurance may be the better option. On the other hand, if more affordable coverage in the event of an accident sounds more appealing, then AD&D insurance may be the better option.

What Are the Pros and Cons of AD&D Insurance?

Its affordability and no need to complete a medical exam makes AD&D insurance a convenient coverage option in the event of an accident. However, its coverage is quite limited compared to life insurance. Before buying AD&D insurance, consider the below benefits and drawbacks.

Pros

• Provides financial protection in the event of dismemberment: Unlike life insurance, AD&D can pay a partial benefit if you survive an accident and suffer a severe injury like dismemberment.
• Typically more affordable than traditional life insurance: AD&D premiums are often lower because it covers only accidental deaths. Deaths resulting from natural causes are not covered.
• Does not require a medical exam or health questionnaire: This makes qualifying for coverage that much easier and more convenient.
• Can be purchased as a standalone policy or as a rider to an existing life insurance policy: Additionally, if you have life insurance and AD&D coverage and you are killed due to a covered event, a double payout may be paid to your beneficiary. This is called double indemnity.

Cons

• Does not cover death from natural causes or illness. Life insurance coverage is much more comprehensive and will include deaths from cancer or heart attacks — events not covered by AD&D insurance. For this reason, AD&D insurance is not a suitable replacement for a life insurance policy.
• May not cover certain high-risk activities or occupations. Activities such as skydiving and professional racing may be excluded from your policy. However, insurers may agree to cover these events in exchange for you paying a higher rate.

Is AD&D Insurance Worth It?

Whether or not AD&D insurance is worth it depends on a variety of factors, including an individual's personal circumstances and financial goals.

If you cannot afford a full life insurance policy and don’t mind coverage being limited to only physical accidents, then AD&D insurance can be a suitable alternative.

If the chances of such an accident occurring is particularly high — you work a high-risk occupation, for instance — then buying an AD&D policy may be especially attractive.

How Do I Get AD&D Insurance?

AD&D insurance and other types of life insurance are available through insurance companies. Individuals can start by researching different insurance providers and comparing policies to find the best fit for their needs. When applying for AD&D insurance, applicants will need to provide basic personal information and may need to answer questions about their occupation, overall health and lifestyle habits.

Some employers may also offer what's known as voluntary accidental death and dismemberment insurance as part of an employee benefits package. In some cases, AD&D coverage will include the employee plus their spouse and eligible dependent children.^[6]

Note: Voluntary AD&D insurance, like standard AD&D coverage, can either be tacked on to your life insurance coverage as a rider or be obtained as a standalone policy.