What is AD&D insurance?

Accidental death and dismemberment (AD&D) insurance explained

AD&D insurance is a type of supplemental life insurance policy that offers coverage in the event of a death due to an accident. Most policies also cover injuries such as the loss of a limb, loss of eyesight, loss of speech, hearing loss or paralysis.

AD&D policies are typically added as a rider to a traditional life insurance policy — though policies may be available through your workplace as well. Most AD&D policies offer very limited circumstances in which coverage is available, so it’s important to read through the terms of any policy before signing up.

For example, most AD&D policies don’t cover death from natural causes, suicide, death while committing a crime or death during surgery. This makes the coverage limited to events like falling off a roof or a workplace industrial accident.

If you’re looking for supplemental coverage on top of a regular term life insurance policy, AD&D can offer extra protection in case of accident-related death or injuries.

How AD&D insurance works

AD&D insurance coverage will pay out a cash benefit to beneficiaries if the insured dies due to an accident. Coverage also extends to severe injuries.

AD&D insurance policies detail the coverage amounts and terms for payout based on specific circumstances. For example, a policy may pay out only a 50% benefit in the event of losing one limb but pay out 100% for losing two or more limbs.

Policies may also pay more than the stated insured amount if the insured dies from an accident on commercial transportation. This is called “common carrier” coverage and it may be bundled with a travel insurance policy or part of a stand-alone AD&D policy.

AD&D policies typically offer coverage from around $20,000 up to $500,000 — though some policies may offer more coverage. Average monthly premiums vary based on the amount of coverage you select. You don’t usually need to get a medical exam or report any preexisting medical conditions to qualify for an AD&D policy, but coverage may not be available above a certain age.

Coverage usually extends to accidents at work, at home or while traveling. But death from natural causes is not covered, including death as a result of heart disease, cancer, suicide or stroke. And if the policyholder is injured as the result of an accident but dies at a much later date, AD&D policies may not pay out.

“Many clients often overlook this insurance type until it's too late,” said Ben Klesinger, co-founder and CEO of Reliant Assurance Brokers, which serves 42 states. Klesinger described a client who was a construction worker and had an accident at work, resulting in him losing his leg.

“His AD&D insurance policy provided financial support that helped him cover medical expenses, rehabilitation costs and even modifications to his home. It showed how critical this policy can be for those with risky jobs,” Klesinger said.

According to the U.S. Bureau of Labor Statistics, high-risk jobs include:

• Logging worker
• Aircraft pilot
• Roofers
• Garbage collectors

Life insurance vs. AD&D insurance

AD&D insurance does not cover death due to natural causes or if the death occurs after a certain time frame, and that’s why it’s a good idea to have a proper life insurance policy to cover other circumstances. AD&D insurance should simply supplement that life insurance policy.

Life insurance offers a cash payout in the event of death while you’re covered. It covers almost any type of death, and payouts are typically much higher than AD&D policies offer. Term life insurance is the most similar to AD&D insurance; you select a coverage amount and term length for life insurance coverage and pay a lower premium than you would with other types of life insurance. Term life insurance coverage usually ends once you’ve outlived the term.

Where to get AD&D insurance

AD&D policies can be purchased through an insurance company — though many of them don’t offer stand-alone policies. Instead, AD&D coverage is usually added as a rider, or amendment, to an existing life insurance policy. This rider allows you to extend your life insurance coverage to accident-related injuries as well.

Many employers also offer basic AD&D coverage to employees as part of a benefits package. The coverage amount may be limited, but you can usually pay a monthly premium to upgrade your policy for a higher coverage amount.

Pros and cons of AD&D insurance

AD&D insurance offers specific coverage for accidents that can help ease the burden of death or severe injury due to an accident. But AD&D coverage is limited, and it’s usually a good idea to have additional life insurance coverage as well.

Below are a few pros and cons to consider.

Bottom line

AD&D insurance can offer life insurance coverage for very specific circumstances and may be key for people working in risky industries. Most policies are easy to apply for, offer guaranteed coverage and don’t cost a lot. But coverage is limited to accidents only and even in the event of an accident, you may not be fully covered.

AD&D insurance is best utilized as a supplement to a standard life insurance policy. It can help beneficiaries gain additional funds if your death is due to an accident. It also offers payouts for losing a limb, your eyesight, your hearing, your speech or your ability to move (paralysis). But AD&D insurance is not a replacement for standard life insurance, as it only covers death in the event of an accident.