Life Insurance vs. Accidental Death and Dismemberment (AD&D)
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Life insurance vs. AD&D at a glance
Below are a few key differences between these two types of coverage.
Life insurance
Covers: Death from any cause.
Doesn't cover: Injuries. May not cover suicide in the first two years of the policy.
Cost: May be slightly or significantly more expensive, depending on the type of policy.
AD&D
Covers: Accidental deaths and injuries.
Doesn't cover: Death due to illness, drug overdoses, suicide, war and certain other causes.
Cost: Typically less expensive.
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.
Life insurance vs. AD&D: What’s covered
The biggest difference between 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 life insurance policy typically pays out regardless of the cause of death. Here’s a quick rundown of each type of policy and what’s covered.
Reason for claim | 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. | ||
» MORE: Do I need life insurance?
Life insurance vs. AD&D: How they work
Here’s a rundown of how each policy works, including when they pay out and how long the coverage lasts.
Life insurance
Life insurance pays out if you die while the policy is in force, regardless of the cause of death. It will pay out whether you die of an illness, accident or other cause.
Be aware there are a few situations when your life insurance beneficiaries might not get a payout when you die. If the cause of death was suicide, that’s usually not covered within the first two years of owning the policy. Second, lying on your life insurance application is a form of life insurance fraud, and insurers can deny or delay the payout if they discover inconsistencies in your application.
Life insurance policies also have a “contestability period.” If a policyholder dies within the first two years of taking out a policy, the insurer can challenge the claim if there is any reason to do so — like if they’re suspicious the person lied on the initial application.
The type of life insurance you choose will determine how long your coverage is in effect.
Term life insurance lasts for a set time period, such as 10 or 20 years. If you die after the term ends, your beneficiaries won’t get a payout because the policy has expired. If you still need coverage, you can buy a new policy at the end of your term — likely for a higher price because you’ll be older.
Permanent life insurance typically lasts your entire life and builds cash value you can borrow against. These policies cost significantly more than term life insurance.
» MORE: Compare life insurance quotes
AD&D insurance
You can buy accidental death and dismemberment insurance as a stand-alone product or as a rider on a life insurance policy. Many people get coverage through their workplace.
Unlike life insurance, AD&D policies pay out only if you're killed or injured in an accident.
To qualify for an injury payout, the dismemberment must be part of a vital physical function, such as your limbs, 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.
How long your coverage lasts will also depend on the policy. For example, if you get voluntary AD&D insurance through your workplace, you may need to add the coverage annually, and you may lose it if you leave your job. On the other hand, an AD&D rider attached to a permanent life insurance policy can offer lifelong coverage.
Life insurance vs. AD&D: Cost
AD&D tends to be less expensive than life insurance because its coverage is more limited. Term life insurance, the most affordable type of life insurance, may not cost too much more than AD&D, but permanent policies will generally be much more expensive.
Your own life insurance rates will depend on your age, health and other factors.
To get the most affordable life insurance at any age, it’s a good idea to get quotes from a handful of companies.
Life insurance vs. AD&D: Before you buy
Life insurance is generally a smart purchase if you have people who rely on you financially. But before buying AD&D insurance, ask yourself whether 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. 3, after heart disease and cancer, according to 2022 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 they may not cover deaths caused by other circumstances, including:
A drug overdose.
Drunken or drug-impaired driving by the insured person.
War.
Mental illness.
Suicide.
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.
» MORE: Best life insurance companies
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