Term Life Insurance vs. Accidental Death and Dismemberment

AD&D pays only if a death is accidental, or you suffer a severe injury. Term life covers more causes of death.

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You might think your life insurance needs are covered with an accidental death and dismemberment policy, or AD&D, but that may not be the case.

Accidental death and dismemberment insurance is very different from other life insurance policies like term life. Knowing the difference is crucial to buying the right coverage for your needs.

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      Term life insurance vs. AD&D: What’s covered

      The biggest difference between term life and AD&D insurance is that an AD&D policy pays out only for a death or dismemberment caused by an accident, while a term life policy pays out regardless of the cause of death, with some exceptions. Here’s a quick rundown of each type of policy and what’s covered.

      Reason for claim

      Term life

      AD&D

      Death due to illness or disease

      Yes.

      No.

      Death from an accident, like a car crash

      Yes.

      Yes.

      Death from drug overdose

      Yes.

      No.

      Death from drunken driving (by the insured)

      Yes.

      No.

      Death from suicide

      Yes (if the policy has been in effect long enough, usually two years).

      No.

      Loss of eyesight, hearing or a limb

      No.

      Yes (depending on the injury, you may receive a partial payout).

      Policy details can vary.

      Term life insurance vs. AD&D: How they work

      Term life insurance pays out if you die within a specific time period, regardless of the cause of death. It will pay out whether you die of an illness, accident or other cause. The only exception is suicide, which is usually not covered within the first two years of owning the policy.

      Therefore, if you want to ensure your life insurance beneficiaries get a payout if you die, regardless of the cause, choose life insurance, not AD&D.

      Typical term lengths range from one to 30 years, or sometimes more. If you die after the term ends, there’s no payout because the policy has expired. You can renew or purchase a new policy at the end of your term, but your life insurance rates will be higher than before because you’ll be older — and they may be even higher if you develop any new medical conditions, such as high blood pressure or diabetes.

      Accidental death and dismemberment insurance can be purchased as a stand-alone product or as a rider on a life insurance policy.

      Unlike term life insurance, AD&D policies pay out only if you're killed or injured in an accident.

      To qualify for a payout for injury, the dismemberment must be part of a vital physical function, such as your limbs, your eyesight or hearing. In general, you receive only a portion of the payout for partial injuries, such as losing your sight in one eye. However, if you suffer a more severe injury, such as losing your sight in both eyes, the policy may pay out the full benefit.

      The exact payouts will be listed in your policy.

      Term life vs. AD&D: Before you buy

      Although AD&D insurance may seem like a good idea, ask yourself if it’s really worth the money.

      First, the chances of dying from an illness are greater than the chances of dying from an accident. Among the leading causes of death, accidents are No. 4, after heart disease, cancer and COVID-19, according to 2020 data from the Centers for Disease Control and Prevention.

      If you die because of an accident but not right away, your beneficiaries might not see any benefits. Collecting on an AD&D policy requires proof that a death or injury was directly caused by the accident or occurred within a certain time frame after the accident, usually a few months.

      AD&D policies often exclude deaths due to high-risk activities such as skydiving or car racing. And deaths caused by a drug overdose, drunken or drug-impaired driving by the insured person, war, mental illness, suicide and certain other circumstances likely won’t be covered.

      So, if your goal is to provide your family with a financial safety net regardless of how you die, life insurance is the right purchase. AD&D could be a good supplemental life insurance policy, especially if you can get it free through your employer.

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