What Is Accidental Death and Dismemberment Insurance?

AD&D Insurance Explained

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Accidental death and dismemberment insurance pays benefits for bodily losses caused by accidents. This type of coverage pays a death benefit if you die due to a covered accident, but also pays if you lose a limb, sustain a paralyzing injury, or suffer blindness due to a covered accident.

If you aren’t familiar with this type of coverage, keep reading. You’ll learn who qualifies for accidental death and dismemberment insurance, what it covers, what it doesn’t cover, and how to buy it.

What Is Accidental Death and Dismemberment Insurance?

Accidental death and dismemberment insurance, commonly called AD&D insurance, provides financial benefits if you die or sustain a disability due to a covered accident. Although life insurance provides a death benefit, it doesn’t usually offer a living benefit if you suffer a life-changing injury. AD&D insurance does.

How Does Accidental Death and Dismemberment Insurance Work?

AD&D insurance often fills in financial gaps that other types of insurance can’t. If you lose a leg in a car accident, the medical payments coverage of your auto insurance and health insurance will help pay your hospital and rehabilitation expenses. But AD&D insurance works in a simpler way, paying a set benefit for the lost limb. Likewise, AD&D insurance pays a death benefit if you die due to a covered accident.

The benefit paid is based on the coverage amount (the face amount of the policy) and what type of injury you suffer. For example, if you lose a limb, your policy may pay half of the coverage amount to you directly, while if you die, it would pay 100% to your beneficiaries.

Covered AD&D Losses

AD&D policies cover death, dismemberment, and some other injuries caused by a wide range of tragedies, including falls, fires, and poisonings, as well as accidents that occur while operating work-related machinery. Typically, this type of policy also covers deaths caused by choking, drowning, or suffocation.

Generally, AD&D insurance covers loss of hearing, sight, speech, or body movement (paralysis), as well as the loss of one or more body parts, such as an arm, finger, or leg.

What AD&D Does Not Cover

But AD&D insurance doesn’t cover losses caused by all types of misfortunes. As with other types of insurance, AD&D policies come with exclusions. For example, MetLife doesn’t cover losses caused by or contributed to by:

  • Attempted suicide or suicide.
  • Driving while intoxicated.
  • Felonious activities.
  • Fumes, gas, or poison absorbed, administered, or ingested voluntarily.
  • Infections (except caused by an external wound, sustained accidentally).
  • Ingesting alcohol with drugs, medications, or sedatives.
  • Intentionally self-inflicted injuries.
  • Mental or physical illness.
  • Military service (except U.S. National Guard service).
  • Operating an aircraft.
  • Prescribed or over-the-counter drugs, medications, or sedatives (unless taken as directed).
  • War.

Bear in mind that covered losses and exclusions can vary among providers. Before buying an AD&D policy, it’s important to know what it covers and the circumstances under which it won’t provide protection.

Buying AD&D Insurance

Many employers offer a limited amount, such as $10,000, of AD&D insurance at no cost as part of their benefits packages. But you may be able to increase the coverage amount up to a maximum of $500,000, for example, depending on your employer (and for additional cost). Some employer-sponsored insurance programs also offer family AD&D coverage plans. 

Purchasing AD&D insurance as a voluntary policy through a benefits plan has advantages and disadvantages. You can often pay your policy premium through pre-tax payroll deductions, so you won’t have to worry about missing a payment. But employer-sponsored AD&D policies may limit the amount of coverage based on your annual compensation.

Some organizations, such as credit unions, also offer AD&D insurance at no cost—though you might need to “claim” or activate benefits in order to receive coverage.

If your employer doesn’t offer AD&D insurance, you can purchase a standalone policy. Several companies, including AIG Direct, sell personal AD&D insurance policies. Companies such as Mutual of Omaha offer accident insurance, which features a death benefit for covered accidents, but no dismemberment benefits. The Balance requested a quote for a 40-year-old man from Mutual of Omaha, and we received an estimate of $39.21 per month for $200,000 in coverage. 

Your auto insurance company may offer you an AD&D endorsement for your car insurance policy. But keep in mind that an AD&D car insurance endorsement only covers death or dismemberment caused by a covered automobile accident.

Eligibility for AD&D Insurance

Buying AD&D insurance doesn’t require taking a medical examination. Some insurers provide a streamlined online application and purchasing process that asks for basic information, like your name, address, nationality, and beneficiary information. However, insurers do impose age restrictions for AD&D coverage. For example, AIG Direct offers guaranteed acceptance for applicants aged 18 to 80. Meanwhile, Mutual of Omaha sells accidental death policies to folks aged 18 to 70, with guaranteed renewal up to age 80.

Submitting an AD&D Claim

The claims process varies by provider. Some companies, including Cigna Life & Accident, allow you to submit a claim by phone, fax, email, or online. If you purchase AD&D insurance through an employer, the organization’s human resources office may require you to fill out a customized claim form to submit to the insurer.

As with all types of insurance, it’s important to understand an AD&D policy’s claims process. The terms of the contract should detail how to file a claim, to whom you should file it, and time limits for filing. Though time limits may vary between insurers, it’s best to file your claim as soon as reasonably possible.

There is a two-year contestability period after coverage starts during which the insurer can contest and potentially refuse a claim based on any material misstatements you made in your application.

AD&D Benefits

AD&D policies pay according to the severity of a covered loss. If you die in a covered accident, your beneficiary would receive 100% of the policy’s face value. But for non-fatal losses, the insurer may only pay a percentage of the benefit to you or a named beneficiary. Typical payouts include:

  • 100% for loss of hearing and speech, or eyesight
  • 100% for quadriplegia
  • 100% for loss of two limbs
  • 75% for paraplegia
  • 50% for loss of an arm or leg, hearing only, sight in one eye, or speech only
  • 25% for loss of an index finger or thumb

If you have more than one covered loss, from one or more accidents, most policies will not pay more than the full benefit amount in total. For example, suppose you lose sight in one eye from one accident and are paid 50% of the benefit. A year later, another accident leaves you a paraplegic. Instead of receiving 75% of the full benefit amount for the second claim, you would only receive 50%, or the remaining benefit amount. 

Do I Need Accidental Death and Dismemberment Insurance? 

Fatal accidents occur more often than you may realize. In 2019, unintentional accidents were the third-highest cause of death in the United States, according to the Centers of Disease Control and Prevention.

AD&D insurance works best in combination with life and health insurance. Life insurance covers more types of deaths than AD&D does, but it isn’t designed to pay if you become disabled by an accident. And while health insurance can cover expenses such as doctors’ and hospital bills, it won’t help pay for housing, utility, or rehabilitation bills, or replace lost income while you recuperate.

Certain jobs, such as those in commercial fishing and logging, pose a high risk of injury or death, which can increase the cost of life insurance and limit the amount of coverage people employed in those industries can afford to buy. Using AD&D to supplement your life insurance if you’re in a high-risk job can increase the death benefit your beneficiaries will receive if you die in a covered accident.