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What is accidental death & dismemberment (AD&D) insurance?
Matt Hands, VP, Insurance
Accidental death and dismemberment insurance (also known as AD&D insurance) is precisely what it sounds like – coverage for death or dismemberment due to an accident. With this specialized policy, your insurer agrees to pay out a pre-determined benefit to you (or whomever you designate in the event of death), should you suffer an insured event.
Know that accidental death and dismemberment insurance shouldn't be considered a substitute for traditional life insurance. Instead, it should be used to supplement it as it provides extended coverage for unexpected events.
AD&D insurance is commonly purchased as a rider on a life insurance policy – your insurer may offer the coverage for an added cost. However, you may also be able to seek out standalone coverage in some cases.
What does AD&D insurance cover?
While each AD&D plan may be different, coverages typically fall into three categories: accidental death, physical loss, or loss of use. Be sure to read your policy terms for more details.
Accidental death
Upon an accidental death, such as a car accident or drowning, your policy will pay out a pre-determined lump sum to your beneficiaries.
Physical loss
Upon the loss of a body part, such as a limb, ear, finger, or toe, your policy will pay out a certain benefit (subject to the severity of the loss).
Loss of use
Dismemberment also refers to the loss of use, which can include loss of sight, hearing, speech, and even paralysis. Again, the amount received depends on the severity.
Example accidental death & dismemberment policy
To gauge an idea of how plan payouts work in relation to the different types of losses that are covered, below is a sample AD&D insurance policy that Manulife offers to OMA members. Here, the insured can choose a pre-determined benefit, and each coverage will be calculated as a percentage of that benefit. For example, if the insured chooses $500,000, and dies from an accidental cause, the beneficiaries will receive the full amount. On the other hand, if the insured loses a thumb, the policy will pay out half ($250,000).
What doesn't AD&D insurance cover?
Be aware that AD&D plans come with many exclusions. Death from natural causes isn’t covered – hence the term, accidental death. Additionally, death or dismemberment resulting from high-risk activities (detailed in the policy), illegal activities, mental illness, or self-harm may be excluded. Be sure to review your plan carefully for specifics.
Natural death causes
Unlike traditional life insurance, natural death causes aren't covered. This includes death from health issues, like heart attack and cancer, as well as old age.
High-risk & illegal activities
Plans may have exclusions for acitivites like skydiving and racing. Also, events related to intoxication, along with felonious activities, generally aren't covered.
Mental illness & self-harm
Suicide as well as self-harm injuries are commonly excluded from AD&D coverage. This can be regardless of mental illness that causes the event.
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Do I need accidental death & dismemberment insurance?
Whether AD&D insurance is the right coverage product for you will depend on your own case as a policyholder. While these plans protect against very specific (and oftentimes, limited) events, they can also provide peace of mind for those at risk. Here, we cover a few factors that can help you decide:
| Consider purchasing AD&D insurance if you: |
|---|
| ✓ Work a high-risk job: Firefighters and construction workers are examples of workers who may benefit from AD&D insurance. But check your plan for work-related exclusions. |
| ✓ Travel frequently: Those who travel frequently or have long commutes face a higher risk of death or dismemberment due to transportation. But be aware of policy exclusions (e.g. for flights or flight workers, specifically). |
| ✓ Want extra coverage: If you want the additional benefits for peace of mind, AD&D insurance can be low-cost, especially as a life insurance rider. |
| Consider foregoing AD&D insurance if you: |
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| ✕ Have sufficient life insurance: Life insurance already covers you for death, even if it's an accident. If your policy is comprehensive enough, the added protection may be unnecessary. |
| ✕ Have sufficient disability insurance: While AD&D pays a lump sum for dismemberment, disability insurance pays regular payments if you're unable to work, replacing your income. |
| ✕ Work a low-risk job: If you simply work a desk job at home, the risk of accidental death or injury is much lower. The cost may outweigh the need, based purely on probability. |
Is anyone eligible for AD&D insurance?
Because AD&D insurance covers you for accidents, there typically is no medical underwriting for these plans (unless it's purchased in conjunction with traditional life insurance, where the underwriting is required for the life insurance). This makes the plans much more accessible for those with pre-existing conditions. There may simply be an age bracket you need to meet, such as 18 to 70 years old.
But while this is the case (and as mentioned above), there may be restrictions for those in high-risk occupations, such as pilots and military personnel. You may still qualify for coverage, but work-related events may not be insured.
Check your group benefits first
Did you know? In addition to life and health insurance, many employers include AD&D coverage as part of group benefits. Before shopping for an individual plan, check to see if you already have the specialized coverage.
The caveat is that group benefits tend to be limited – you likely won’t be able to choose your coverage amount or customize the policy to your needs. Plus, employer-funded insurance is tied to your job, meaning you could lose the coverage if you lose your job for whatever reason. Keep all this in mind when considering your options (and supplement as needed).
How much is accidental death & dismemberment insurance?
AD&D insurance is generally a very affordable coverage product. After researching the market for quotes, we found that a 35-year-old female could get a policy with $100,000 in coverage for only $4.10 per month.
However, AD&D coverage is typically paired with other types of life insurance – and added on as a policy rider. For the same female, a bundled insurance policy, including term life insurance with $500,000 in coverage, plus the $100,000 for accidental death and dismemberment, costs $48.10 per month.
You won't know the exact cost of your plan until you review all your coverage needs and shop the market. Get started by talking with one of our licensed brokers today.
Accidental death insurance vs. life insurance
As mentioned, it's important to understand that accidental death & dismemberment insurance is a form of supplemental life insurance – it is not meant to substitute the coverage in full. Here are the key differences between the two products:
| Characteristic | AD&D insurance | Life insurance |
| Coverages | This covers you for cases of accidental death (e.g. car crash) and serious injury, leading to dismemberment. | This covers you for death from any cause (unless excluded), including natural and accidental deaths. |
|---|---|---|
| Benefit | The benefit is paid as a lump sum to you or your beneficiaries (in the event of death). | The benefit is paid to your beneficiaries as a lump sum. |
| Medical exam | Typically, no medical exam is required (unless it's a rider to life insurance which does require one). | There are options with a medical exam and without, but traditional term and whole life plans will require one. |
| Cost | The cost is extremely affordable (e.g. less than $10 per month). | The cost can be affordable (e.g. for term life) or much higher (e.g. for whole or universal life). |
| Product type | AD&D can be purchased as a standalone coverage or more commonly, added as a rider to life insurance. | Life insurance is its own coverage product – but you can add AD&D as a rider with many insurers. |