Life Insurance vs. Accidental Death and Dismemberment (AD&D)

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Accidents are the third leading cause of death in the United States. Since so many people are killed each year in accidents, it makes sense to plan for them by protecting your family with insurance. But with so many insurance options out there, it can be confusing to know what coverage is best. Life insurance and accidental death and dismemberment (AD&D) insurance are two policies you can use to provide benefits for those who depend on you. 

While these types of insurance are similar, they aren’t the same. Both have a death benefit, but an AD&D policy only provides the benefit if your death is the result of an accident. Life insurance, on the other hand, is less restrictive. Learn more about the differences between these two policies so you can determine whether either is right for you. 

Key Takeaways

  • Life insurance and AD&D insurance both provide a death benefit to your beneficiaries. 
  • AD&D insurance covers you if you die from an accident or have suffered a covered injury from an accident.
  • Life insurance provides more comprehensive coverage for death, including death from accidents, illnesses, and natural causes. 
  • Consider having both policies if you want your beneficiaries to receive an enhanced payout for your accidental death as well as financial protection in the case of tragic accidental injuries.

What Does AD&D Insurance Cover?

AD&D insurance provides a benefit if you are killed or severely injured in an accident such as a car accident, a heavy machinery accident, a fall, or drowning. It typically pays if one of the following applies to you:

  • Loss of a limb
  • Loss of a thumb and another digit
  • Paralysis
  • Blindness or hearing or speech loss from a covered accident

However, AD&D insurance is not intended to cover death from natural causes, such as cancer or a heart attack.

If a covered accident causes your death, your beneficiary would typically receive 100% of your policy’s face value. For non-fatal accidents, the policy might pay 50% for each covered injury and that benefit would go directly to you. Let’s say you lost your sight in one eye from an accident. If your policy pays 50% of the face value for this type of loss and you had a $500,000 policy, you would get $250,000.

If the accident was a secondary cause of injury or death—such as if you had a heart attack while driving, resulting in a fatal car crash—it may not be covered under AD&D.

AD&D insurance can be an affordable way to provide benefits for your family. It’s often cheaper than life insurance because it covers fewer causes of death. Depending on your age and the amount of coverage you select, an AD&D policy could cost as little as a few dollars per month to around $20.

If you get coverage through a group plan, such as one offered by your employer, the cost of coverage may increase as you age but it could end when your employment does. But if you buy a policy on your own, it’s more likely that you’ll pay the same price and have the same coverage until you cancel or until it expires, if applicable. The more coverage you want, the higher the premium you’ll pay.

AD&D insurance and accidental death insurance aren’t the same. Accidental death insurance doesn’t have the dismemberment coverage for non-fatal injuries that AD&D offers.

What Does Life Insurance Cover?

Life insurance pays a death benefit to your beneficiaries if you die while the policy is in force. Unlike AD&D policies, life insurance covers most types of death, including accidents and natural causes. 

Life insurance generally comes in two main forms: term, which provides coverage for only a set period of time, and permanent (both universal and whole life), which does not expire. Typically, if you die from an accident, illness, or natural causes, you’re covered under both term and permanent life insurance. For example, if you’re diagnosed with cancer and pass away, your beneficiaries would receive your life insurance benefit. 

But life insurance can be significantly more expensive than AD&D. Life insurance costs vary widely based on many factors, including your health, age, occupation, and lifestyle choices. The length of the term you choose, whether you choose permanent coverage, and the amount of coverage you select also impact your costs. 

For example, the average cost of a $250,000 20-year term policy is $27 per month for a healthy 45-year-old. However, a permanent policy for the same amount and the same 45-year-old might cost $372 per month.

Comparing AD&D and Life Insurance

AD&D Policy Life Insurance Policy 
Covers coma, paralysis, loss of a limb, loss of sight, and loss of hearing from an accident? Yes No
Covers death from accidents? Yes Yes
Covers death from natural causes? No Yes
Covers death by suicide?  No Yes, typically after 2-year waiting period
Requires medical exams before getting approved? No Sometimes 
Denials based on high-risk occupation? No Yes
High premiums? No Sometimes
Expires? Sometimes Sometimes

Life insurance and AD&D policies overlap in many ways. Both these policies may expire depending on what type of policy and terms you have, and both provide financial payouts to your beneficiaries upon a covered death. However, these insurance policies have some key differences.

AD&D insurance is much more restrictive. Only deaths caused by an accident are covered. This type of insurance usually doesn’t cover any intentional injuries or deaths from illnesses or natural causes. Risky activities like extreme sports and car racing may also not be covered.

When shopping for a life insurance or AD&D policy, be sure you understand if the coverage will expire after a certain number of years or upon a certain age, or if it’s permanent (lifelong if premiums are paid).

People who don’t qualify for a life insurance policy due to a high-risk occupation or medical problems can often get AD&D insurance. AD&D policies don't take your profession into account, nor do they require a life insurance medical exam

However, the cost of an AD&D policy may not be any more expensive than a term life policy—in which case, the life insurance policy is probably a better choice since it covers more causes of death. 

AD&D Riders for Life Insurance

If you already have a life insurance policy, you might be able to customize it by adding an AD&D rider. This would increase your premium, but it would also provide extra coverage for certain injuries from an accident. Plus, an AD&D rider often doubles your insurance benefit. For example, if you had a $500,000 policy and died from an accident, your beneficiaries might receive a $1,000,000 payout. 

Some insurance companies offer an enhanced version of AD&D that provides additional payments if you’re engaged in safe behaviors during the accident. For instance, if you’re wearing your seatbelt and have airbags when you are injured in a car accident, you might be eligible for extra benefits.

Choosing Your Coverage

You can purchase AD&D and life insurance as two standalone policies. You may also be able to add an AD&D rider to your life insurance plan. 

If you feel like you have sufficient protection with an existing life insurance policy, you may not want to add an AD&D rider or purchase separate coverage. If you can easily afford the extra payment, though, it’s one way to pad your existing protection. 

But if you don’t have sufficient life insurance coverage and can qualify for a regular life insurance policy, this would likely be preferable to supplementing insufficient coverage with an AD&D policy.

AD&D insurance isn’t a replacement for life insurance. It is very limited in its scope. However, for people who don’t qualify for life insurance, it can be a way to provide some benefit to your loved ones in case you die accidentally.