AD&D vs. life insurance: What is the difference?

What is the difference between life insurance and AD&D?

Insurance plays a pivotal role in financial planning and ensuring your family's security. The world of insurance can be complex, however, and there are a lot of options. In order to make an informed choice, it's essential that you understand how various types of insurance and your options differ.

Descriptions of life insurance and accidental death and dismemberment (AD&D) insurance are often similar, and there is some overlap. Both types of insurance are frequently offered by employers as a benefit, sometimes at an additional cost. Before you make a decision between the two, understand that there are major differences. Simply put, AD&D covers only accidents, while life insurance covers death from any cause. Read on for a more detailed look at both.

AD&D is cheaper than term life insurance

AD&D is known for its affordability. It may offer lower premiums than you would pay for term life insurance. The covered events are much more limited, however, and your family will not collect a death benefit from AD&D if you die of natural causes.

AD&D doesn’t cover as many outcomes as life insurance

AD&D insurance is designed to cover a narrow range of events, like auto wrecks or workplace accidents. It does not provide coverage for natural causes of death, such as illnesses or age-related complications. Life insurance, in contrast, offers comprehensive protection encompassing almost all causes of death.

If I am a business owner, which should I offer my employees?

Businesses can provide a variety of insurance benefits to employees. Your decision will depend on your business needs, budget, and the level of protection you want to offer. AD&D can be a valuable addition to your benefits package, particularly if your workers are handling heavy machinery or dangerous objects. If you can afford to offer it, term life insurance with an AD&D rider can provide more comprehensive coverage. Our agents can help you build a competitive benefits package that helps draw and retain top talent.

Life insurance or AD&D, which is better?

If you are in a potentially dangerous job or have risky hobbies like parachuting, hang gliding, or scuba diving, AD&D might be suitable. For most people, though, life insurance is a broader, more comprehensive coverage choice.

What does life insurance cover?

Life insurance covers most causes of death, including accidents, illnesses, suicides, and homicides. There are instances, however, when a claim might be denied, such as when premium payments are not made or when health information is misrepresented. Life insurance ensures that your loved ones are financially secure in the event of your death. The life insurance benefit paid to your beneficiaries is tax free, and it can be used to cover debts, pay burial expenses, make mortgage payments, and maintain your family’s lifestyle after you’re gone.

Related: 6 reasons to consider life insurance

What does AD&D cover?

AD&D typically covers injuries or death resulting from specific types of accidents, like car collisions or workplace mishaps. The exact coverage can vary among insurance policies and providers, but here are the common types of injuries covered by AD&D insurance:

• Eyesight loss
• Lost limbs or digits
• Severe burns
• Paralysis
• Brain injuries
• Coma
• Accidental poisoning

Who needs AD&D insurance?

Since AD&D covers injuries as well as death, it is usually recommended for people in particularly dangerous jobs, like those who work with heavy equipment. In the event of a workplace accident that prevents you from continuing your job, AD&D can help you maintain your lifestyle while you transition into a new position or career.

Do I need both life insurance and AD&D?

If you already have life insurance, you probably do not need AD&D as well, unless your job has a high rate of dismembering accidents. There are other ways you can protect yourself and your family. Disability insurance, which covers both accidents and illnesses, is an alternative to AD&D. A qualified agent can answer your questions and help you find the right mix of insurance to ensure your family’s financial security.

Can you collect both AD&D and life insurance?

Yes, if both your AD&D and life insurance cover the reason for your death, your family will receive both benefits. If you die from a cause not covered by AD&D, your family will receive only the life insurance benefit.

Life insurance with an AD&D rider

You may have the option to simply add AD&D coverage to an existing life insurance policy through a rider. They will cost less combined than they will if you purchase them separately.

Should you consider disability insurance?

Disability insurance is another option that overlaps with AD&D. It provides a portion of your normal income in the event that you become disabled due to an injury, illness, or other disabling event and are unable to work. It covers more scenarios than AD&D. Paired with life insurance, it can provide all the coverage you need. You can often get it through your employer, or you can look into an individual disability insurance policy. 

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*With limited exceptions in the case of suicides.