Accidental Death and Dismemberment (AD&D) vs. Life Insurance At a Glance
Both life insurance and accidental death and dismemberment (AD&D) insurance pay a benefit if you die, but their coverage limitations differ. Life insurance covers any cause of death, while AD&D only covers death or major injuries caused by accidents.
If you’re concerned about providing for your loved ones, it’s important to understand the differences between these two types of insurance. Learn the advantages and disadvantages of both AD&D insurance and life insurance.
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Planning For the Unexpected
Accidents are the fourth leading cause of death in the U.S. and the leading cause among adults aged 20-44. Both AD&D and life insurance cover death from accidents, but with AD&D insurance, you can also receive a benefit for a covered injury while you’re alive.
Most employers offer AD&D coverage as a free or low-cost add-on to their employee benefits packages. If you purchase your own AD&D coverage, it’s usually inexpensive because it only pays a death benefit if you pass away due to an accident. For this reason, AD&D insurance does not adequately replace standard term of permanent life insurance.
Accidental Death and Dismemberment (AD&D) vs. Life Insurance
Standalone policy or rider for life insurance policy
Coverage Length Options
Can be term or permanent if bought as a riderIf part of an employer-sponsored health plan, until you leave your job
Term or permanent
100% but declines after 65200% for a life insurance rider
100% of face value
50% for loss of one limb100% for loss of two parts100% for death
100% for death
Death by accident, loss of sight, hearing, speech, a limbInjury due to accident
Death by almost all causes
$31/mo* 20-year term$49/mo term +AD&D rider
Not needed to enroll
May be necessary to enroll
What Is Accidental Death and Dismemberment (AD&D) Insurance?
If you suffer death or serious injury in an accident, AD&D insurance provides a benefit. It covers death from accidents like car accidents, fires, falls, and drowning. It also covers injuries like loss of a limb, paralysis, and blindness. AD&D does not cover death from natural causes, such as a heart attack or cancer.
You can purchase AD&D insurance as a standalone policy or add it as a rider to a life insurance policy.
AD&D insurance only covers injuries and deaths caused by accidents. In contrast, regular life insurance covers almost all causes of death.
AD&D coverage excludes the following:
- Injuries occurring before the policy came into effect
- Death from illness or natural causes
- Extreme sports like scuba diving and skydiving
- Injury or death caused by driving under the influence of drugs or alcohol
- Drug overdose
- Death from suicide
- Injuries while playing pro sports
- Death or injury suffered during an act of war
- Death or injury from flying a plane or auto racing
What Is Life Insurance?
A life insurance policy pays your beneficiary if you die for almost any reason, including natural causes and accidents. Life insurance is more expensive than AD&D because it pays in a broader variety of circumstances. Most life insurance applicants must go through medical underwriting. Health status, occupation, and coverage limits affect life insurance premiums.
Types of Life Insurance
There are various types of life insurance, each with different price points and benefits.
- Term life insurance: Reasonably priced temporary policies that expire after a set term, such as 20 years
- Permanent life insurance: A slightly more expensive type of policy that does not expire and often features a growing cash value component.
- Whole life insurance: Permanent policies that accumulate cash value and remain in effect as long as you pay the premiums
- Universal life insurance: Permanent policies where the cash value builds based on current interest rates or stock market performance
- Final expense life insurance: Covers expenses such as funeral arrangements after your death; also known as burial insurance
Life insurance covers deaths in most cases, including accidental deaths, but it does not pay out for some causes of death. Check your policy language for exclusions, which may include risky hobbies like scuba diving and flying a private plane. If you die due to an excluded circumstance, your life insurance will not pay a benefit.
Other common exclusions include:
- Suicide during the first two years of the policy
- Murder, if the beneficiary murders the insured
Having a high-risk job like construction, mining, or aviation can raise your premiums or impact your ability to get life insurance coverage.
AD&D vs. Life Insurance: Coverage Length
Coverage Length Options
Same as life insurance for a term policy riderPermanent coverage for a permanent life insurance riderWhile employed for an employer sponsored planAs long as you pay premiums for individual AD&D coverage
Length of policy term for term insuranceAs long as you pay premiums for permanent insurance
For both AD&D insurance and life insurance, coverage length depends on the type of insurance you buy. Either type of insurance can come in the form of a permanent or term policy.
AD&D vs. Life Insurance: Payout Differences
100% for covered death100% for loss of two limbs50% for loss of one limb
100% for covered death
Covered death, covered injury from accidents
Insured for injury, beneficiary for death
Both AD&D and life insurance pay 100% of the benefit if the insured passes away due to a covered cause. AD&D coverage also makes payouts in certain cases of injury; life insurance does not.
Lump sum payments to beneficiaries are not taxable for both life insurance and AD&D coverage. For injuries caused by accidents, AD&D policies pay a percentage of the face value to the policyholder.
AD&D vs. Life Insurance: Costs
$31/mo 20-year term$49/mo term +AD&D rider$536/mo whole life
These are the average premium prices for a 35-year-old male in preferred health with $500,000 in coverage. Premiums vary based on the following factors.
What Factors Go Into Determining Your Premiums?
The cost of AD&D insurance primarily depends on how much coverage you buy. Life insurance premiums are based on several factors linked to risk and life expectancy, such as those listed below:
- Age and sex: Younger people generally pay lower premiums because they have more time to pay for a policy and are less likely to die. Women tend to pay lower premiums than men because their life expectancy is longer.
- Health status and history: Most life policies require medical underwriting to determine whether the applicant has health conditions that could shorten their lifespan. For example, a beneficiary in good health might pay less for life insurance than a similar beneficiary with diabetes.
- Policy type: Term policies are less expensive because they provide coverage for a limited period, such as 20 years. Permanent policies cost more because they provide coverage for life and accumulate cash value over time.
- Coverage amount: More coverage means higher premiums.
AD&D vs. Life Insurance: Compare Advantages and Drawbacks
Advantages to AD&D coverage include:
- Financial protection in case of accidental death or dismemberment
- Affordable premiums
- No medical underwriting needed for coverage
- Pays insured for injuries caused by accidents
- Pays twice the death benefit when purchased as a life insurance rider
- Often offered by employers at no additional cost to the beneficiary
- Optional add-ons provide a double benefit in certain circumstances
Life insurance is more expensive than AD&D insurance, but it has benefits that AD&D does not offer:
- Covers most causes of death, including accidents and illness
- Guaranteed payout if you have permanent life insurance
- Potential cash value growth with permanent life policies
- Optional riders, like AD&D, for extra coverage
- Term policies provide reasonably priced coverage
Drawbacks of AD&D insurance include:
- Only pays for death due to accidents
- No potential for cash value growth
- Continually reduced death benefit starting when the beneficiary turns 65; by age 80, the benefit may have been reduced by 85%
- Temporary coverage if AD&D policy is purchased with employer-sponsored health insurance
Life insurance provides more protection to your beneficiaries, but it also has drawbacks. These include:
- Higher premiums than AD&D because life insurance covers more causes of death
- Requires medical underwriting, potentially leading to higher premiums if you smoke or have certain health conditions
- Lacks living benefits, meaning you will not receive a payout if you lose a limb or your eyesight
Which Should You Choose: AD&D, Life Insurance, or Both?
If you’re not sure which type of coverage to buy, here are the top factors to consider.
Choose AD&D Insurance If…
If your employer offers AD&D insurance at no cost to you, accept the coverage. If you must buy individual AD&D coverage, consider doing so if you have a high-risk career or hobby. But read the plan’s terms of coverage carefully. AD&D generally does not cover extreme sports like skydiving and bungee jumping.
Choose Life Insurance If…
If you want to make sure your beneficiaries receive a death benefit when you pass away, life insurance is a safer bet because it covers death for any reason. For lower premiums, buy a term policy. If you’d like your policy to grow in cash value or you want lifelong coverage, choose permanent life insurance.
Choose Both If…
If you want the benefits of life insurance plus extra coverage for accident-related injuries or death, get life insurance with an AD&D rider. The rider may increase your life insurance premium, but it can also double your death benefit if you pass away because of an accident. If you travel a lot or have a high-risk job, adding this rider protects you and your loved ones.
How to Add Accidental Death and Dismemberment Insurance to Your Life Insurance Policy
Your employer may provide AD&D coverage at no additional cost as part of their employee health benefits package. If you already have life insurance, you may be able to add AD&D as a rider; contact your provider to see if you can add a rider to your existing policy.
If the above methods are not available to you, you can look at standalone AD&D policies online, get quotes, and compare prices. You can also contact an insurance agent for quotes.
To decide how much AD&D coverage you need, speak to a financial advisor or an insurance agent. Factor in funeral costs, possible home adjustments if you become disabled, and lost income.
What It All Means For You
AD&D insurance pays a benefit for accidental death or dismemberment, is less expensive than life insurance, and does not require medical underwriting. However, AD&D only covers injuries and deaths caused by accidents. To protect your loved ones in case you pass away due to illness or natural causes, it’s best to have a life insurance policy as well. If you have a high-risk job, carrying both types of insurance gives you the most robust coverage.