Accidental Death and Dismemberment (AD&D) Insurance
Accidental death and dismemberment insurance, or AD&D, pays out if you die accidentally or lose a limb due to an accident. AD&D should be viewed as a supplement to your regular life insurance since it only covers certain types of death and accidents.
What Is AD&D Insurance?
Accidental death and dismemberment insurance, or AD&D for short, is a limited form of insurance that pays out if you die or get seriously injured in an accident.
You may receive living benefits if you are injured in an accident, but the amount you get usually depends on the type and severity of the injury.
Accidental death insurance is inexpensive because it is considered low risk to insurers. In other words, it rarely pays out.
How Does AD&D Insurance Work?
AD&D insurance supplements other insurance — such as regular life insurance or disability insurance — in the event you are accidentally killed, dismembered or seriously injured. It is important to understand exactly what an AD&D policy covers — and does not cover — when considering all your insurance options.
What Does AD&D Insurance Cover?
Accidental death and dismemberment insurance will pay 100% of the policy value if you are killed in an accident.
- Full benefits if you die in an accident
- Some benefits if you are seriously injured in an accident
Cases of accidental death can include exposure to the elements, traffic accidents, homicide, falls, drowning, plane crashes or accidents involving heavy equipment.
Dismemberment is the loss of a body part or bodily function due to an accident. The types of injuries covered can vary by policy and insurance company.
- Loss of a limb or finger
- Loss of sight, speech or hearing
AD&D insurance often comes with many restrictions. It does not cover death due to natural causes or illnesses.
What Does AD&D Insurance Not Cover?
AD&D insurance doesn’t cover all cases of death or dismemberment. It only pays out in specific situations and under specific conditions.
For example, if you suffer a heart attack while swimming that causes you to drown, the policy may not pay out.
AD&D policies often have a long list of circumstances under which a death or injury isn’t covered.
- Drinking and driving
- Risky activities, such as skydiving, bungee jumping or car racing
- Suicide or attempted suicide
- Death or injury while committing a crime
- Drug overdose
The death benefit is paid only if you die within a certain period of time after the accident. This can range from a few months to a year.
How Does AD&D Pay Out?
AD&D insurance payouts vary depending on the insurance company issuing the policy. Typically, an AD&D policy will pay 100% of its value if you die due to a covered accident.
But the payout for dismemberment typically depends on the extent of the injuries and the terms of the insurance contract. For instance, if you lose a hand, foot or one of your eyes, the policy may only pay out 50% of the value of the policy.
So it’s uncommon for a policy to pay 100% for an injury or dismemberment. One exception may be losing both a limb and a major bodily function or feature, such as a finger and vision in one of your eyes.
Exactly how much an AD&D policy will pay out for a particular loss is detailed in the policy’s schedule. The schedule lists the losses it covers and how much it will pay for each loss up to the value of the policy.
You should review the schedule of any AD&D insurance policy you are considering purchasing to understand exactly what is covered.
Where Do You Get AD&D Insurance?
Many employers offer AD&D insurance as part of a benefits package. Your employer’s policy may even allow you to include coverage for your spouse and children.
If your job offers AD&D insurance, you might be able to get a basic policy for free as part of your benefits package.
Some life insurance companies also sell individual AD&D policies. You can work with an insurance agent to compare policies.
Accidental death and dismemberment coverage may also be sold as a rider, or add-on, to a life insurance policy. Adding this rider could double what your life insurance pays out if you die from an accident.
What Companies Sell AD&D Policies?
There are several insurance companies that sell AD&D insurance. Some specialize in selling group plans to employers, while others make coverage available to individuals.
|Insurance Company||Where Available|
|AIG Direct||Individual through an insurance agent or broker|
|Assurity||Individual through an insurance agent or broker|
|Farmers Insurance||Individual through an insurance agent or broker|
|Fidelity||Individual through an insurance agent or broker|
|Gerber||Individual through an insurance agent or broker|
|Lloyd's of London||Individual through an insurance agent or broker|
|Mutual of Omaha||Individual through an insurance agent or broker|
|Sun Life||Through employers|
|The Hartford||Through employers|
|TruStage||Through certain credit unions|
Employer-Based vs. Your Own Plan
It may be worth comparing an employer-based AD&D policy with one you purchase on your own to see which is a better bargain.
There are a few things you should know about each — particularly the advantages and disadvantages of each option.
|Employer Plans||Private Insurance|
|Premiums may be lower than a private policy||Cost may be higher than through a workplace policy|
|Premiums typically are deducted automatically, providing added convenience and less chance of missing a payment||Missing premium payments can cause your coverage to lapse|
|Not portable — you typically lose coverage when you leave your job||You can keep your coverage as long as you keep making premium payments on time|
|Limited options may not fit your particular needs||May be able to get higher limits on coverage and wider range of coverage options|
|Less scrutiny on your age and health since risk is spread across the total pool of workers at your job||Your age and health may play a greater factor in increasing the price of your premiums|
Differences Between AD&D and Life Insurance
There are several differences between accidental death and dismemberment insurance and life insurance. AD&D insurance should be viewed as a supplement to your regular life insurance coverage.
The biggest differences are the purpose of each type of insurance and the circumstances under which each will pay out.
- Life Insurance
- Life insurance is designed to provide financial protection to your family in the event of your death. It will pay out for almost any cause of death, whether accidental or not, with only a few exceptions.
- Accidental Death and Dismemberment Insurance
- AD&D insurance only pays out in the event of an accident that meets the policy’s schedule/coverage. You may also need life insurance to cover your family’s needs in the event your death is not covered — for instance, if you die of an illness or other cause your AD&D policy does not cover.
Life insurance typically covers more causes of death than AD&D. In addition, you can add AD&D coverage to your insurance portfolio — either as an AD&D rider to your life insurance policy or as a stand-alone AD&D policy.
|Cause of Death or Injury|
|Accident (car crash, plane crash, hunting accident)|
|Injuries or paralysis due to an accident|
|Loss of a limb, an eye, ability to hear or speak|
|Natural causes or illness|
Pros and Cons of AD&D Insurance
AD&D insurance can offer coverage for your loved ones if you die or suffer a serious injury related to an accident.
But because AD&D provides limited coverage, it isn’t right for everyone.
- No Medical Exam or Questions
- No medical exam is required to obtain AD&D insurance. You likely won’t need to answer questions about your health either. This can be appealing to people with pre-existing conditions who may find it difficult to get affordable life insurance elsewhere.
- Get Coverage Quickly
- With no medical exams, questionnaires or waiting periods, it’s usually quick and easy to get approved for a policy. You may be able to obtain a policy in a few days, or even in a few minutes for some policies purchased online.
- Low Cost
- AD&D insurance is usually cheaper than standard life insurance. For example, monthly premiums for an AD&D policy from Farmers Insurance might cost $4.50 for every $100,000 in accidental death coverage. Or your employer may offer AD&D coverage at no cost to you.
While accidental death and dismemberment insurance may seem like a good idea, it shouldn’t replace standard life insurance coverage.
- Coverage Applies to Accidents Only
- AD&D insurance provides a payout only if you are killed or seriously injured in an accident. Other causes of death, such as chronic illness or cancer, are not covered. If your cause of death is not determined to be an accident, your beneficiaries won’t receive any money.
- There Are Several Other Exclusions and Limitations
- Policies often have a long list of coverage exclusions, such as surgery or skydiving. Also, the death benefit is paid only if you pass away within a specified period of time after the accident.
- If You Switch Jobs, Your Coverage Will Likely End
- Most people with AD&D insurance get it through a group plan at work. You usually can’t keep the policy if you take a new job somewhere else.
Is Getting AD&D Insurance a Good Idea?
AD&D should be considered a supplement to regular life insurance coverage and to disability insurance because it only pays out in limited situations with specific conditions.
Most experts recommend getting AD&D insurance if it’s offered for free through your employer. It’s typically free — or very inexpensive — making it a worthwhile investment in your family’s financial security.
But if you must pay for it, other options will afford you better protection and coverage.
For example, term life insurance won’t cost much more than AD&D insurance for people who are young and healthy.
Another option is disability insurance. You may be able to obtain disability insurance that provides all the coverage an AD&D policy does at a lower rate through your employer.
11 Cited Research Articles
- Huddleston, C. (2022, May 19). What To Know About AD&D Insurance. Retrieved from https://www.forbes.com/advisor/life-insurance/accidental-death-and-dismemberment-insurance/
- Bowman, C. (2022, March 28). What Is Supplemental Life Insurance? Retrieved from https://www.usnews.com/insurance/life-insurance/supplemental-life-insurance
- IBISWorld. (2022, January 31). AD&D Insurance Industry in the US - Market Research Report. Retrieved from https://www.ibisworld.com/united-states/market-research-reports/add-insurance-industry/
- IBISWorld. (2022, January 31). AD&D Insurance in the US - Market Size 2005–2027. Retrieved from https://www.ibisworld.com/industry-statistics/market-size/add-insurance-united-states/
- Shoenthal, R., & Shih, A. (2022, January 11). Life insurance vs. accidental death & dismemberment (AD&D) insurance. Retrieved from https://www.policygenius.com/life-insurance/life-insurance-vs-accidental-death-and-dismemberment/
- CUNA Mutual Group. (n.d.). Show Younger Members Why Accidental Death & Dismemberment (AD&D) Coverage Matters. Retrieved from https://www.cunamutual.com/resource-library/insights/consumers/show-younger-members
- National Safety Council. (n.d.). National Safety Council Injury Facts. Retrieved from https://injuryfacts.nsc.org/
- SBWIRE. (2020, December 3). Accidental Death and Dismemberment Insurance Market to Witness Excellent Growth: AXA, MetLife, Allianz. Retrieved from http://www.sbwire.com/press-releases/accidental-death-and-dismemberment-insurance-market-to-witness-excellent-growth-axa-metlife-allianz-1318962.htm
- Huddleston, C. (2020, May 19). What To Know About AD&D Insurance. Retrieved from https://www.forbes.com/advisor/life-insurance/accidental-death-and-dismemberment-insurance/
- Society for Human Resource Management. (2018). 2018 Employee Benefits: The Evolution of Benefits. Retrieved from https://www.shrm.org/hr-today/trends-and-forecasting/research-and-surveys/Documents/2018%20Employee%20Benefits%20Report.pdf
- Regents of the University of California. (n.d.). Accidental Death & Dismemberment (AD&D). Retrieved from https://ucnet.universityofcalifornia.edu/compensation-and-benefits/disability-life-accident/add/index.html