Accidental Death and Dismemberment (AD&D) Insurance Explained

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This insurance does not replace life insurance and covers most accidental deaths or injuries.

In the event that you are seriously injured or die in an accident such as a car accident, accidental death and dismemberment insurance will kick in. Unfortunately, accidents do occur — they are the third leading cause for death in the United States, according to Centers for Disease Control and Prevention’s most recent mortality data.

Although AD&D insurance can be used in conjunction with disability insurance and life insurance, it does not replace them all. Although it offers some financial protection, the coverage is not comprehensive so it’s not right for everyone.

What is AD&D insurance?

AD&D insurance covers two types of coverage. There is an accidental death policy which pays out if someone dies in an accident and a dismemberment plan that pays out when you suffer a serious injury like a paralysis or the loss of a limb. Your spouse is the beneficiary of your AD&D insurance policy. You also get the money if you sustain one of the injuries listed in the policy.

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Here’s the catch: Death or injury must result directly from an accident. For example, if your beneficiary suffers a heart attack and is involved in a fatal car accident, they won’t likely receive any money.

AD&D insurance may provide financial security for you and your family in the event you are injured or die from natural causes. It is not meant to replace life insurance. It doesn’t provide coverage for all disabilities or injuries, so it’s not as comprehensive as disability insurance.

Insurers often sell accidental death insurance but not dismemberment coverage. These policies will only pay out if you are killed and don’t cover injuries that leave you severely injured, but still alive.

What is the coverage of AD&D insurance?

Insurance that covers accidental death and dismemberment generally covers events that cannot be predicted, such as falls and traffic accidents. Your beneficiaries will receive the full face value of your AD&D insurance policy if you are killed in an accident.

Indemnity coverages for dismemberment vary from insurer to insurer. These may include:

  • Amputation of a limb.
  • Persistent loss of sight, speech, or hearing.
  • Paralysis.
  • Work-related injuries
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The severity of your injury will determine how much you get paid. Insurers typically pay 25 to 50% of the benefit amount if you are injured. You’ll likely receive the entire payout if you lose two body components. Paralysis is covered by most insurance companies. This includes quadriplegia (which affects both arms, legs and hands) and paraplegia (which affects the lower half of your body).

Certain policies provide additional coverage for accidents that occur while riding a bus or train, plane, ferry, or taxi as fare-paying passengers.

What is not covered by AD&D Insurance?

Insurance policies that cover AD&D typically do not cover accidental injuries or death resulting from the following:

  • Driving and drinking
  • Natural causes
  • COVID-19 is a physical illness.
  • Skydiving is a high-risk activity.
  • War.
  • Suicide or attempted suicide
  • Overdose of drugs

Most insurers require that a death occur within three to twelve months of the accident for it to be covered.

Compare policies carefully to ensure you understand the details and how each policy works.

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How to get AD&D insurance

Workplace is the best way to obtain AD&D insurance. Employers often offer AD&D insurance as part of their benefits package. You may also be able to add your spouse and children to the policy.

Stand-alone policies can be purchased directly from the insurers, or through a bank/credit union. Acceptance is sometimes guaranteed in certain cases. This means that you don’t have to pass a insurance medical exam and answer any health questions to be eligible for coverage.

For a small fee, some insurers allow you to add an AD&D Rider to your individual life insurance policy. This rider will allow your beneficiaries to receive an additional lump sum payout in the event of your death in an accident. You’ll also get the money if the accident causes you injury. This rider is also known as a double indemnity rider. It increases the payout of your life insurance policy in the event you are killed in an accident.

AD&D insurance costs

AD&D insurance covers only accidents so it is generally cheaper than traditional life insurance.

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According to Quotacy (a Minneapolis-based insurance brokerage), a $200,000 AD&D plan would cost $13 per month for a 40 year-old applicant. A term policy of the same amount would cost around $15 per month.

Life insurance vs. AD&D insurance

The coverage of life insurance is much more extensive. You can get coverage when you die from any cause, including an accident, illness, or old age. There are also life insurance riders which will pay out if your condition is chronic, critical, or terminal. Term life insurance is relatively affordable, especially if you apply when you are young and healthy.

AD&D insurance does not pay out for natural causes of death. It does pay out if you are injured or lose a part of your body, which is not covered by life insurance.

The big question is: Is AD&D insurance worthwhile?

Remember that AD&D coverage is an addition to life insurance. This helps you cover your expenses after your death. Disability insurance covers you in the event you are disabled or become disabled. You should consider buying life insurance first if you have dependents that would be financially affected if you die. Disability insurance can help protect your income in the event you are unable to work or become ill.

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It’s worth considering if your employer offers AD&D coverage at no cost. If your insurer offers AD&D coverage, it’s worth looking into.

If you are at risk of getting hurt in an accident, then you might not want to purchase an AD&D policy. A stand-alone policy may be more cost-effective in these cases.