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Life Insurance vs. AD&D Insurance

Life Insurance vs. AD&D Insurance
Lee Huffman
Updated October 12, 2021
4 Min Read

There are a variety of insurance products that consumers can choose from to provide money in case they pass away. Two of the most popular insurance options are life insurance and accidental death and dismemberment (AD&D) insurance. In this article, we'll help you understand what each of these insurance products covers and the differences between the two so you can make an informed decision before you buy. 

What is AD&D Insurance?

Accidental Death and Dismemberment (AD&D) insurance provides a payout when an insured dies or suffers specific injuries from a qualifying activity. If the cause of death or injury is covered, then the insurance policy does not pay out.

AD&D insurance policies cover deaths by certain types of accidents, such as a traffic accident, drowning, or fall. Deaths caused by illness, surgery, high-risk activities, suicide, war, and others are not covered. Additionally, deaths caused by a covered accident must occur within a specified timeframe (usually three months), otherwise, the policy will not pay out.

A big benefit of AD&D policies is that you do not have to die before they pay out. Most policies will pay a percentage of the coverage amount for the loss of a limb, partial or permanent paralysis, or the loss of use of specific body parts. Policies pay out a percentage of the coverage amount for each of these specific injuries. The schedule in your policy shows the payout for each covered injury.

Because AD&D insurance has such a narrow scope of eligible circumstances in which beneficiaries receive a payout, the premiums tend to be much cheaper than comparable life insurance policies. Some employers provide AD&D insurance for free or low premiums. These policies are also available as a standalone policy or as a rider to your life insurance. When added to life insurance, it is known as “double indemnity,” which means that your beneficiaries could get paid out up to twice the death benefit if they die from a covered reason.

What is Life Insurance?

Life insurance is coverage that provides a death benefit to beneficiaries if you die for any reason. It is not based on a specific set of circumstances and covers all types of deaths. The big exclusion is a suicide, which is generally excluded for the first two years of the policy.

There are many different types of life insurance, such as term, whole life, universal life, and variable universal life. The most popular form of life insurance is term life insurance. Term life insurance often provides the highest death benefit for the most affordable premiums. Term insurance offers fixed premiums for a specific period of time, such as 20 years. Once the term expires, the insured person must apply for a new policy or pay premiums that can escalate quickly.

Term insurance can also be purchased as a standalone policy or through many employers. If you’re young or in relatively good health, purchasing a standalone policy may be the best option. You have more insurers to choose from and you may qualify for lower premiums. Before buying a policy through your employer, compare life insurance quotes from multiple providers. You may be able to save money or qualify for a policy with more benefits.

Differences Between Life Insurance and AD&D

Although life insurance and AD&D insurance policies are typically purchased to protect your loved ones in case of death, there are differences between the two types of policies. The main difference between the two is that Accidental Death and Dismemberment (AD&D) insurance provides a payout when an insured dies or suffers specific injuries from a qualifying activity, whereas Life insurance provides a death benefit to beneficiaries if you die for any reason.

The table below highlights some of the most common differences.

Life InsuranceAD&D Insurance
Affordable premiumsYesYes
Coverage expiresDepends on the type of life insuranceYes
Death due to illness or diseaseYesNo
Death from accidentYesYes, for covered reasons
Death from drug overdoseYesNo
Death from drunken drivingYesYes, if the drunken driver was not the insured
Death from suicideYes (after exclusion period)No
Loss of limb (or use of), sight, or speechNoPartial payment for covered injuries

Frequently Asked Questions (FAQ)

Do you need both life insurance and AD&D insurance?

Most people do not have enough life insurance to meet all of their needs. You are better off purchasing a higher death benefit instead of buying a standalone AD&D policy or adding an AD&D rider to your life insurance policy. There are too many restrictions that limit how or when an AD&D policy pays out for it to be worth purchasing one.

Is AD&D the same as life insurance?

No, accidental death and dismemberment (AD&D) insurance is not the same as life insurance. While it does provide payment to beneficiaries if you die, it only covers specific reasons. These reasons include traffic accidents, homicides, or drowning. If you die of natural causes, illness, war, high-risk activities, or any other non-covered reason, the policy will not pay out.

Can you claim both life insurance and AD&D?

Yes, this is known as “double indemnity,” where multiple policies can pay out for the same event. Just like you can have multiple life insurance policies that pay out when you die if you die for a covered reason, then an AD&D policy will also payout in addition to your traditional life insurance policy.

Which is better: Life Insurance vs. Accidental Death and Dismemberment?

Life insurance is typically considered the better insurance product over an AD&D policy because it will pay its death benefit should you die for any reason. AD&D insurance will only pay out if you die due to a limited number of reasons, such as exposure to the elements, falls, or traffic accidents. Additionally, you must die within a specific timeframe from the covered event (usually three months), otherwise, the AD&D policy won’t cover the claim.

Is AD&D insurance worth it?

For most people, AD&D insurance is not worth it. These policies can be tempting because they are generally pretty inexpensive. However, there is a limited scope of scenarios where you will actually receive a payout. Because of that, most people are better off investing the premiums into a term life insurance policy.

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