- Accidental death and dismemberment insurance covers death and specific injuries that occur by accident.
- AD&D is not the same as workers' compensation, which covers on the job injuries.
- Term life insurance with an AD&D rider may be a better option, as it provides more coverage.
- Policygenius can help you compare life insurance policies to find the right coverage for you, at the right price »
There are two types of life insurance: permanent life and term life. Term life is more affordable because unlike permanent life insurance it doesn't have a cash value component and expires after a specified period of time.
There are different types of term life insurance. The most common is level term life insurance, where your beneficiary receives a death benefit if you die during the policy. Unlike level term life insurance, accidental death and dismemberment, referred to as AD&D, only pays benefits for death and injuries by certain accidents.
Although AD&D may be good as a supplemental rider to your term life insurance, alone it may leave you underinsured.
What is AD&D life insurance?
Accidental death and dismemberment life insurance (AD&D) pays a cash benefit for accidental death or loss of limbs, hearing, sight, or speech due to an accident. Death or injury must occur as a direct result of an accident. It's a no medical exam life insurance plan that has guaranteed acceptance, meaning your application will definitely be approved.
Most employers offer some type of AD&D coverage as part of its employee benefits package. However, just as with employer-provided group life insurance, you lose this benefit if you retire, resign, or are terminated.
Don't confuse AD&D with workers' compensation. Workers' compensation only applies if you are injured on the job. AD&D covers accidental death or injuries that happen away from work. However, according to The Hartford, "AD&D would pay out a lump sum to help the employee navigate the financial pitfalls of missing work – perhaps permanently – due to a serious physical loss."
How much does AD&D insurance cost?
Below are the average monthly premiums for AD&D insurance based on coverage amount.
| Average monthly premium | AD&D annual coverage |
| $7 | $100,000 |
| $14 | $200,000 |
| $21 | $300,000 |
| $28 | $400,000 |
| $35 | $500,000 |
Data from Quickquote
AD&D versus term life insurance
Because most Americans who have life insurance are underinsured, the disadvantage of AD&D is that it only covers death or dismemberment by accidents. If you die of natural causes or any reason other than an accident, AD&D doesn't pay a death benefit.
Most people get life insurance to cover the mortgage, education, and other expenses so their family can continue after they die. If you need life insurance to cover expenses that don't include death by accident or accidental injury, you may be better off with a regular level term life insurance policy, with AD&D as an add-on rider.
| Coverage | Term life insurance | AD&D insurance |
| For a set time period and expires | Yes | Yes |
| Covers death by any cause (disease, suicide, murder, natural, etc) | Yes | No |
| Covers loss of limbs, sight, hearing, or speech due to injury or accident | No | Yes |
| Death benefit | Yes | Yes* |
*If death is by accident
When considering life insurance, it is wise to consult a financial advisor, accountant, and estate planning attorney to make sure you have the proper coverage you need for your goals and budget. Your life insurance needs will change as you age and must consider children, marriage, divorce, retirement, and caring for aging parents. Once you've signed on the dotted line, it's a lot more difficult to make changes if you need to adjust your coverage.
Ronda Lee is an associate editor for insurance at Personal Finance Insider covering life, auto, homeowners, and renters insurance for consumers. She is also a licensed attorney who practiced litigation and insurance defense.