Cameron Huddleston is an award-winning journalist with nearly 20 years of experience writing about personal finance. She also is the author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances. F.
Cameron Huddleston ContributorCameron Huddleston is an award-winning journalist with nearly 20 years of experience writing about personal finance. She also is the author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances. F.
Written By Cameron Huddleston ContributorCameron Huddleston is an award-winning journalist with nearly 20 years of experience writing about personal finance. She also is the author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances. F.
Cameron Huddleston ContributorCameron Huddleston is an award-winning journalist with nearly 20 years of experience writing about personal finance. She also is the author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances. F.
Contributor Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
| Deputy Editor, Insurance
Updated: Feb 1, 2024, 4:56pm
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Accidents are the fourth leading cause of death in the U.S., and the No. 1 cause of death for adults ages 25 to 44, according to the Centers for Disease Control. Only heart disease, cancer and Covid kill more Americans than accidents.
That’s why there is accidental death and dismemberment (AD&D) insurance. But as with all the best life insurance products, it pays to understand what it really covers and if you need it.
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As the name suggests, accidental death and dismemberment insurance provides coverage for a death due to an accident. It generally also pays if you lose a limb or a function such as sight, hearing or speech in an accident.
Typically, the beneficiaries you name on your policy will receive a lump-sum payment if you die in an accident. You can receive what are called living benefits if you are injured, and the amount you receive often depends on the type of injury.
For example, an AD&D policy might pay 50% of the coverage amount you purchase if you lose one thing—for example, a hand, foot or sight in one eye—and 100% if you lose two or more things. And policies might pay 50% to 100% of the benefit amount for paralysis as a result of an accident.
The amount of coverage you can get will depend on limits set by insurers or by employers that offer AD&D insurance as a workplace benefit. For example, you can purchase an AD&D policy from Farmers Insurance with a benefit ranging from $37,500 to $200,000 for an accident covered by your policy. Farmers may also pay $1 million for “certain circumstances,” such as losing your life in a plane crash on a commercial flight.
AD&D insurance will cover only deaths and injuries from accidents—not natural causes or illnesses. Not heart attacks or strokes. Policies typically cover death or injuries from accidents at work, home and while traveling.
In addition, if your death is the result of an accident while traveling on public transportation, including a bus, train or airplane, the payout can be double or triple the amount of your base coverage. To be covered, a death from an accident doesn’t have to be instant, but it usually needs to occur within a certain time frame, such as within a few months. The policy will outline the rules.
Some insurers will pay an additional benefit if you were wearing a seatbelt during an accident that led to an injury or death. Additional benefits might also be provided to help children pay for higher education. Counseling, legal and financial advising services for beneficiaries can be added benefits for a surviving spouse, too. These options will vary by insurer.
What is considered an “accident” by insurance companies isn’t as straightforward as it might seem.
“The definition of accident could be subjective,” says Jon Voegele, agency vice president of Country Financial.
Policies tend to have a long list of situations when death or injury won’t be covered. Those exclusions can vary from company to company and can depend on the state where the policy is issued. Benefits are generally not payable for:
If you work for a company, there’s a good chance your employer offers AD&D insurance as part of its benefits package. Some employer group plans also allow employees to insure their spouse and children.
A few insurance companies, such as AIG Direct, Farmers Insurance and Mutual of Omaha, sell individual AD&D insurance policies. You can also look for quotes online or could work with an insurance agent who can compare policies to find the best one for your needs.
Accidental death coverage can also often be purchased as a life insurance rider, or add-on, to life insurance policies. The coverage can double what your life insurance payout would be if you die as a result of an accident.
The cost for AD&D insurance tends to be lower than rates for traditional life insurance because the coverage is limited to accidents. And if your employer offers AD&D insurance, you might be able to get a basic amount as a free benefit.
In general, AD&D insurance costs are tied to the amount of coverage you purchase. For example, monthly premiums might start at $4.50 for every $100,000 in accidental death coverage from Farmers. Rates start at about $8 a month for $100,000 of coverage from Fabric. Because rates can vary from insurer to insurer, it can pay to shop around for the best rate.
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Some people mistakenly think that having AD&D insurance is a financial safety net if someone dies unexpectedly. “It gives them a false sense of security,” Voegele says. Because AD&D provides limited coverage, it isn’t right for everyone.
You don’t have to take a medical exam to get AD&D insurance. And you don’t have to answer questions about your health, which can make this type of policy appealing to people with pre-existing conditions that make it difficult to find affordable life insurance.
You won’t be denied coverage because of your health. You just have to meet the age requirements. Typically, you must be between ages 18 and 70 or 80.
You can get coverage quickly. Because there are no lengthy questionnaires to fill out, no medical exams to take and no waiting period, you can get approved for a policy within a matter of days or even minutes for some policies purchased online.
Coverage is limited. AD&D will only pay out if the death or injury was a result of an accident—and there are plenty of ways to die other than an accident. This limited coverage is a big drawback.
Coverage isn’t as cheap as it seems. An AD&D policy will cost less than regular life insurance. But that’s because the chance of an AD&D payout is relatively low. “The odds of you using it are so far down the scale that it becomes expensive for the payout,” Voegele says.
You might lose your coverage if you leave your job. Most people who have AD&D insurance get it through a group plan at work, Voegele says. Often, you can’t keep that coverage if you leave your job.
Because it only pays out in the event of an accident, AD&D insurance isn’t ideal for everyone. But don’t turn it down if it’s offered as a free workplace benefit.
“If it’s offered for free, absolutely take it,” Voegele says. “If you have to pay for it, I would recommend that one size does not fit all.”
In other words, consider the value you get for a workplace policy you’d have to pay for to determine if the coverage you’d get would be worth the cost.
A term life insurance policy is usually better coverage than AD&D insurance because it provides a payout for any cause of death (except suicide, generally within the first two years of having the policy). So accidents, heart attacks, strokes and more are all covered under a traditional term life policy.
If you’re young and healthy, you might be able to get a term life policy at a rate that’s not much higher than what you’d pay for AD&D insurance.
You’d also be better off signing up for disability insurance through your employer or getting a policy on your own in case you’re unable to work. Disability insurance will help replace lost wages if you can’t work because of illness as well as an injury.
“I would shy away from accidental death plans because there are so many things that can happen to us that aren’t accidents,” Voegele says. “You need to be covered for anything.”
If you have adequate life insurance you generally don’t need AD&D insurance. Life insurance such as term life insurance could provide your family with funds to pay expenses if you pass away unexpectedly. AD&D can supplement life insurance because it will pay out if you lose a limb or eyesight, or other non-death injuries covered by the policy. And it will pay out as life insurance if you die from an accident. But AD&D insurance is not a replacement for life insurance because it is much more narrow in the types of death covered.
AD&D includes life insurance, but only for accidental death. It’s also different from life insurance because it covers severe non-fatal injuries such as loss of a limb or paralysis. Regular life insurance, such as term life insurance, doesn’t cover injuries that aren’t fatal.
AD&D insurance will not pay out for someone who dies from cancer. AD&D’s life insurance component is specifically for accidental deaths. Thus, AD&D insurance won’t pay out anything for someone who dies from sickness, cancer, heart disease or simply old age.
Some examples of accidental death are: car accident, plane crash, accidental fall, drowning and dying in a fire. It’s important to know what qualifies as an “accidental” death if you have AD&D insurance. That way you know the limits of what the policy will pay for.
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ContributorCameron Huddleston is an award-winning journalist with nearly 20 years of experience writing about personal finance. She also is the author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances. Follow me on Twitter @CHLebedinsky
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