What Is AD&D Insurance?
Accidents, or unintentional injuries, are the fifth leading cause of death and the number one leading cause of death for ages 34 and younger, according to John Hopkins Medicine. In 2019 alone, there were 33,244 fatal car crashes in the U.S, according to the Insurance Institute for Highway Safety (IIHS). Given the frequency of accidental deaths, having an AD&D insurance policy that covers you and your family can be essential.
AD&D death benefits are similar to life insurance but much more limited in coverage. You may even receive a payout if you survive an accident but lose a limb. Keep reading to learn about coverages and if AD&D insurance is right for your lifestyle and needs.
What Is Accidental Death and Dismemberment Insurance?
Accidental death and dismemberment insurance (AD&D) provides coverage for death after a sudden accident, such as drowning or a vehicle collision. If you survive the accident, AD&D insurance also covers dismemberment — the loss of a limb — or function (e.g., hearing, sight, speech).
AD&D insurance can be purchased as a standalone policy but can also be an added benefit (rider) to your existing life insurance policy. Accidental death and dismemberment insurance policies do not generally require a medical exam, so they can be an option worth considering for people with underlying health conditions who cannot be approved for life insurance, although death from illness or natural causes will not be included.
What Does AD&D Insurance Cover?
AD&D insurance will pay the policy's face value (also called a death benefit) to the beneficiary if the policyholder dies in an accident or survives the accident but suffers dismemberment.
Under an AD&D policy, accidental death covers a death due to unforeseen circumstances that are not illness- or health-related. Covered accidental deaths may include:
Exposure to the elements
Heavy equipment accidents
Common carrier accidents (Fare-paying accidents within trains, subways, planes, Uber, ferries, taxis, buses and more)
If you do not die immediately from the accident, you may still be covered if your death is related to the accident and occurs within a specific time frame. Many insurers impose a time limit on coverage following an AD&D-protected accident — typically within 90 days of the accident. However, the death must be directly related to the accident.
AD&D policies will pay a specified portion of the death benefit if the policyholder suffers accidental dismemberment.
If the policyholder loses one leg or one arm, their policy may pay half of the death benefit. If they lose two or more limbs, their policy may pay the full death benefit. Sudden loss of hearing or vision (not due to natural causes) is also often covered by AD&D, with the same applied rules. If the policyholder loses one eye, their policy may pay half of the death benefit. If they lose both eyes, their policy may pay the total value of the death benefit.
Dismemberment covers permanent or partial paralysis, meaning injuries from an accident resulting in complete loss of use of one or more limbs. This includes paraplegia, quadriplegia, uniplegia, triplegia and hemiplegia.
What It Covers
What Beneficiaries Receive
Accidental deaths (e.g., traffic accidents, drowning, falling off a cliff)
Full death benefits
Permanent/partial paralysis, loss of a limb, loss of speech or hearing
Typically, 50%-100% of policy's face value (death benefits) depending on the severity of dismemberment, loss of speech or hearing or paralysis
The insurer and policy will define their coverage for different types and extents of injuries. Be sure to understand exactly when and how you're covered before buying your AD&D policy.
Does AD&D Cover Heart Attacks?
Basic AD&D policies will not cover medical ailments like heart attacks and strokes. AD&D insurance will cover only deaths and injuries from accidents, which is defined by the insurance coverage. AD&D insurance will not cover you if you are hospitalized or die due to an infectious disease or virus.
Does AD&D Cover Cancer?
AD&D policies will only cover accidental deaths or dismemberment, it will not cover death due to natural causes and illnesses such as cancer, diabetes, old age and brain tumors. However, it is possible to add a "living benefit" rider to your life insurance policy, which can help policyholders facing a covered illness.
Car Accident Fatalities by State
District of Columbia
*2019 fatal crash totals from the IIHS
How Does AD&D Insurance Differ From Life Insurance?
Life insurance and AD&D insurance both pay death benefits to the beneficiaries if the policyholder dies, but there are a few notable differences.
AD&D is not a substitute for life insurance — it pays for limited circumstances: if you die or are dismembered in an unexpected accident. It works well as an addition, or rider, to life insurance and provides an extra death benefit to beneficiaries in addition to the regular life insurance policy. This added death benefit is known as double indemnity, and increases the insurance payment if your death was due to an accident.
Think of it as supplemental life insurance that may increase your beneficiaries' death benefit if both policies cover the same event. Think of it as supplemental income, if you become dismembered in an accident, something life insurance would not cover.
Here are a few differences between accidental death and dismemberment insurance and life insurance:
Death caused by natural causes (heart attack, stroke, brain tumor and more)
Death caused by unnatural causes or accidents (slip and falls, motor vehicle accidents and more)
Death caused by drunk driving
Death caused by accidental drug overdose
Death caused by suicide
Yes — if the policy has been active for a minimum of two years
Death caused by illness (cancer, mental illness and more)
No — not under a basic policy. However, the policyholder can purchase a separate rider that could cover illness-related death
Accident that results in loss of a limb, sight, hearing or speech
Accident that results in loss of use of limb(s)
Accident that results in paralysis
If you add AD&D as a rider to your existing life insurance policy, your beneficiaries will receive death benefits from both the AD&D and life insurance policy in the event of an accidental death.
AD&D Insurance: Pros & Cons
Typically more affordable than life insurance
Financial support for beneficiaries
Coverage ends when you switch jobs (if your AD&D coverage was through an employer)
Double indemnity (if the AD&D is a rider to life insurance, the policy payout can double)
Does not build cash value
No medical exams
Covers accidental dismemberment or death
Typically more affordable than life insurance: Policy costs are typically lower than life insurance. AD&D coverage may be free if offered through your employer's group plan. It can also be sold privately and in conjunction with a life insurance policy.
Financial support for beneficiaries: If you survive an accident but lose a limb that affects your ability to work, you can replace some of your lost income while you recover or seek a new job.
Double your insurance payout: Through double indemnity (you have both AD&D and life insurance), then your beneficiaries may receive both death benefits if you die an accidental death.
No medical exams: You do not need to take a medical exam or be in good health to get AD&D coverage.
Limited coverage: Compared to life insurance, deaths in AD&D policies are covered only due to accidents. You will not be covered for health-related deaths.
Coverage ends when you switch jobs: The AD&D coverage that you get through a group plan at work will likely end if you switch jobs.
No cash value: AD&D insurance does not have a cash value component, like a permanent life insurance policy would.
Be Prepared With AD&D Insurance
Unexpected accidents can occur anytime, and the consequences can be felt by loved ones. AD&D insurance can provide a cash benefit after a death or dismemberment caused by an accident. AD&D coverage is a cost-effective and valuable addition to your current life insurance benefits package.
SmartFinancial can help you look for the life insurance policy you and your beneficiaries need at a low price. An insurance agent can help you add AD&D insurance to your policy too. Enter your zip code below and fill out our easy questionnaire to receive your free quotes.