Life Insurance Vs. Accidental Death & Dismemberment (AD&D) Insurance – Forbes Advisor

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Do your loved ones count on your income to survive? If so, it’s natural to want to protect them financially in case you die or are seriously injured and can no longer work.

Many people purchase life insurance to ensure loved ones have funds to pay for a mortgage, children’s education, funeral costs and other expenses. But another type of insurance policy—accidental death and dismemberment (called AD&D)—is also an option.

The threat of dying from an accident is real. Up to age 44, unintentional injuries (including drug overdoses, which are not covered by AD&D insurance) are the leading cause of death for Americans, according to the Centers for Disease Control and Prevention.

But do you need both traditional life insurance and AD&D? Or just one? Here’s how to decide.

Life Insurance vs. Accidental Death & Dismemberment Insurance

Life insurance and accidental death & dismemberment have similarities. The circumstances in which these policies pay out are what truly separate traditional life insurance from AD&D insurance:

  • A traditional life insurance policy provides money to your designated beneficiary regardless of the cause of death (except suicide within the first two years of owning the policy).
  • An AD&D insurance policy only pays for accidental death or accidental injuries that meet the requirements for a claim.

Traditional life insurance

Traditional life insurance includes term life insurance, whole life insurance and universal life insurance. These life insurance types pay out a death benefit that can replace your income and help survivor pay a mortgage, college tuition or other important bills.

If you choose a whole life or universal life policy, there is the potential for cash value accumulation based on the performance of an index or investment account.

Traditional life insurance policies often require a life insurance medical exam, and you can be denied coverage.

Your beneficiaries can get the life insurance payout if you die of an accident, a heart attack, cancer, pneumonia, Covid, any other illness or simply old age.

Accidental death & dismemberment insurance

Accidental death & dismemberment insurance can also provide crucial funds for your family if you die as a result of an accident (not by natural causes or illness). For example, AD&D will cover death resulting from a bus accident but will not cover death from a heart attack.

With AD&D insurance, your loved ones can also receive a payout if you are seriously injured but not killed.

For example, AD&D insurance might pay out if you suffer an injury that:

  • Causes you to lose your ability to speak or hear
  • Paralyzes you
  • Results in the loss of a limb

Some events may not qualify for an AD&D payout if they are injured or deaths associated with:

  • Extreme sports like sky-diving and scuba-diving
  • Suicide or self-injuries
  • Mental illness
  • Alcohol or drug use

AD&D insurance does not require a medical exam and, if you meet some minimum requirements, you will not be denied coverage.

Types of AD&D Insurance

Accidental death and dismemberment policies can vary in the exact causes of death and injury that will be covered. The policy will spell out exactly which types of events qualify for a payout.

For example, it is possible that one policy will pay out in the event of a death related to a firearm accident and another will not.

In addition, a variation on AD&D insurance—”accidental death insurance”—pays out only if an accident results in your death. A severe injury isn’t covered by accidental death insurance.

Some AD&D policies have options to also cover spouses and dependents. Or, you may qualify for employer-based business travel insurance that pays out if you are injured or killed while traveling on company business.

Life Insurance vs. AD&D Insurance Comparison

Should You Buy AD&D Insurance?

Accidental death & dismemberment insurance and standard life insurance are both types of life insurance, but one does not replace the other.

Because of the limits of AD&D insurance payouts, you should not rely on AD&D insurance to cover the needs of a growing family or a business. If you choose to buy only one life insurance type, it should be traditional life insurance because it covers much generally causes of death.

To achieve maximum life insurance coverage, you might consider buying both types of life insurance. AD&D insurance can be an inexpensive supplement to a traditional life insurance policy. Sometimes AD&D is available through an employer for free or for a low cost.

If you buy a traditional life insurance policy, you may be able to add an AD&D life insurance rider and get the extra coverage without buying a separate policy.

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