Traditional life insurance policies provide your beneficiaries a death benefit no matter how you die, whether it’s due to an accident, illness, or other natural causes.
But there is another type of life insurance policy called accidental death and dismemberment (AD&D) insurance that only pays out if your death results from an accident.
In this guide, you’ll learn what AD&D insurance is, how it works, and if you need it.
Table of Contents
- What Is Accidental Death and Dismemberment Insurance?
- How Does AD&D Work?
- Pros and Cons of AD&D Coverage
- Life Insurance vs AD&D
Learn what the most common life insurance policy riders are and how you can benefit from them.
What Is Accidental Death and Dismemberment Insurance?
Accidental death and dismemberment insurance pays a benefit to your policy’s beneficiary if you die due to an accident. This policy will also pay you a benefit if you’re severely injured.
What Does Accidental Death and Dismemberment Insurance Cover?
Standard life insurance policies provide comprehensive coverage (including a death benefit) whether you die from an accident or illness. AD&D only covers if your death is the result of an accident.
Deaths that AD&D insurance covers include:
- Car accident
- Slip and fall
- Accidental poisoning
- Severe burns
- Plane crash
Some AD&D policies include additional benefits, such as:
- Common carrier benefit: Pays an additional amount on top of the base death benefit if your death results from an accident while riding as a fare-paying passenger, e.g., Uber, ferry, or airplane.
- Automobile seat belt benefit: Pays an additional amount on top of the base death benefit if you wore a seatbelt properly when the accident occurred.
- Pedestrian benefit: Pays an additional amount on top of the base death benefit if you’re struck and killed by an automobile on a public street.
Coverage varies depending on the specific policy and insurance provider. It’s essential to review the terms of your policy thoroughly.
What Does Dismemberment Cover?
Some accidental death insurance policies include dismemberment coverage. You get a payout if you’re severely injured in an accident (loss of a limb, sight, hearing, or other specified impairments). Death does not need to occur to receive these benefits.
Injuries AD&D insurance compensates include:
- Loss of limb
- Loss of sight
- Loss of hearing
- Loss of speech
- Severe burns
The amount paid is a specific percentage of the policy’s total death benefit. The injuries covered and their corresponding payout percentages vary depending on the policy and insurance provider.
See what you’d pay for life insurance
How Does AD&D Coverage Work?
Accidental death insurance is usually purchased as a supplement to a standard life insurance policy or an alternative to a standard policy if you’re denied coverage.
AD&D policies offer guaranteed approval. They only cover accidental deaths, so there is less risk for the insurance company.
How payouts work if you endure an accident that’s covered
- In case of accidental death: the insurance company will pay your designated beneficiaries the policy’s total coverage amount as a lump sum.
- In case of accidental injury: the insurer pays a predetermined benefit amount.
How Much Coverage Can I Get?
The amount of accidental death and dismemberment coverage you can get depends on:
- Individual circumstances
- Insurance company
- Policy limitations
AD&D coverage amounts range from $50,000 to $500,000. Coverage length is determined by policy structure. You have three options:
- Annual renewable: In this case, the AD&D policy is active for one year and can be renewed annually. The premium may increase with each renewal based on your age.
- Fixed-term: The policy lasts for a specific amount of time. Assuming you keep up with premium payments, the coverage lasts until the term ends unless you renew or extend it.
- Age-based: Some standalone AD&D policies have an age limit when the coverage automatically terminates. For example, the policy may be in effect until you reach a specific age, such as 65 or 70.
How Much Does AD&D Coverage Cost?
The cost of an accidental death and dismemberment policy varies based on factors such as:
- Your age
The table below shows monthly rates for a $250,000 policy with coverage lasting until the insured turns 80.
|Monthly Cost of $250,000 AD&D Insurance Until Age 80
You can add many riders to your policy to enhance your coverage. Adding these riders increases the cost of your policy.
Riders you can add to your AD&D policy may include:
- Accident-only disability income rider: Provides a monthly benefit if you become disabled.
- Child accidental death rider plus: AD&D coverage on your children 18 and younger.
- Critical accident rider: Pays a benefit if you’re confined to a hospital as an inpatient due to an injury sustained in a covered accident.
- Disability waiver of premium rider: Waives your policy’s premium payments if you become disabled.
- Return of premium rider: Returns of a portion of the premiums paid less any benefits received upon policy cancellation, policy lapse, or end of the coverage period.
- Spouse accidental death rider plus: AD&D coverage on your spouse.
Common AD&D Policy Exclusions
An AD&D policy does not cover specific situations or causes of death and injury. Exclusions may include the following:
- Suicide or self-inflicted harm: Deaths or injuries resulting from the insured person’s intentional self-harm.
- Drug or alcohol abuse: If the insured person’s death or injury directly results from drug or alcohol abuse.
- War or acts of war: Deaths or injuries sustained during combat, military conflicts, or terrorist attacks.
- Criminal activity: If the insured person is engaged in illegal activities or committing a crime when the death or injury occurs.
- Dangerous activities or hobbies: Death or injury resulting from high-risk activities or hobbies, such as skydiving, bungee jumping, or mountain climbing.
- Pre-existing medical conditions: If a death or injury is caused or aggravated by a pre-existing medical condition.
- Aviation accidents (private): While commercial aviation accidents are often covered, deaths or injuries from accidents involving private aircraft, such as small planes or personal helicopters, may be excluded.
- Professional sports: Injuries sustained while participating in professional sports or athletic activities.
Pros and Cons of AD&D Coverage
Unsure if you need AD&D coverage? Weighing the pros and cons can help. Consider the main points below.
- AD&D policies are inexpensive.
- Peace of mind if you die or become dismembered from an accident.
- Easy to qualify, even if you’re uninsurable for traditional life insurance.
- There is no medical exam requirement.
- Coverage is flexible, including the option to customize with riders.
- AD&D policies only cover accidental deaths, not illness or natural causes.
- Death benefit options are limited, often capping out at $500,000.
- Since the odds of an accidental death are low, the cost of the policy may not be worth it.
Standard Life Insurance vs AD&D
The most crucial difference between a standard life insurance policy and an AD&D insurance policy is the type of deaths they cover:
- A standard policy will pay your beneficiaries the death benefit when you die.
- AD&D insurance only pays a death benefit if you die due to an accident.
If you have loved ones depending on you, always apply for a standard life insurance policy first. This will provide the most comprehensive coverage. It’s important to note that standard term and permanent policies are very different.
If you are denied standard life insurance coverage, AD&D insurance is a good backup plan.
What About Supplemental AD&D Insurance?
If your lifestyle or job carries a higher risk of accidental death, consider additional AD&D coverage on top of your standard life insurance policy to protect your loved ones.
Options for supplemental accident coverage include:
- A standalone AD&D policy: A great option if you don’t qualify for traditional coverage.
- Adding an AD&D rider to your standard life insurance: As an optional add-on, this can be more cost-effective if you already have life insurance. You get extra protection without purchasing a separate policy.
- Buying group AD&D insurance through your job: Many employers offer group AD&D insurance as part of their employee benefits package. It’s more affordable than purchasing a standalone policy, but the coverage likely has limitations.
Are you interested in a life insurance policy with an AD&D rider? Use our wise buyers’ guide to learn more about the different life insurance policy options.
Get AD&D Coverage Through Quotacy
As an independent broker, we can help you find life insurance coverage. Quotacy works with over 25 of the nation’s top life insurance companies.
When you apply, your agent begins to go to work for you. If you have risk factors that may make it difficult to find coverage, we’ll shop around for you.
Ultimately, if we can’t find you standard life insurance coverage, we’ll offer accidental death insurance options.
Already have standard and just looking for supplemental AD&D insurance? We can help with that, too.
Note: Life insurance quotes used in this article are accurate as of July 5, 2023. These are only estimates and your life insurance costs may be higher or lower.