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What Is AD&D Insurance?

Accidental death and dismemberment insurance, also known as AD&D insurance, is an insurance that is often overlooked. However, AD&D insurance is typically rather affordable, and provides immense benefits for the beneficiary.

Accidental death, or dismemberment, is impossible to predict. In the tragic event this occurs, having AD&D insurance can help your loved ones carry on in life. What is AD&D insurance, and why should you care? We’ll cover all the details you need to know below. 

How Does AD&D Insurance Work?

Before diving into the more nuanced questions, let’s address AD&D insurance on a high level. Starting with how does AD&D insurance work? 

AD&D insurance fills a void that a standard life insurance policy does not cover. In the event the policy holder died due to an accident, or became disabled, AD&D insurance would kick in and pay a benefit to the beneficiary. AD&D insurance often compliments a life insurance policy. 

What Does AD&D Insurance Cover?

AD&D insurance has wide coverage. Coverage exists, but is not limited to:

  • An accidental death. An accidental death is very broad. But the easiest way to understand this is to think about the causes of death that are not from natural causes. For example, AD&D insurance would pay a death benefit if the policy holder died from; a car accident, a boating accident, a fall which led to a death, or a murder. Other causes of death are also included, but remember, they cannot be health related causes – such as cancer, a heart attack, or a stroke. 
  • AD&D insurance also covers dismemberment. If one loses a limb, or limbs, and cannot work, AD&D insurance will pay a benefit to the policy holder. 

What Does AD&D Insurance Not Cover?

Although AD&D insurance has a wide range of coverage, there are certainly areas where AD&D insurance would not pay a beneficiary. Such areas include: 

  • Death from a drug overdose 
  • Dying from a natural cause (such as an underlying medical issue) 
  • Death from a suicide 
  • Disability from an attempted suicide attempt 

Individual AD&D Policies Vs. Rider Policy 

If you have a traditional life insurance policy, you can add an accidental death and dismemberment onto your existing policy as a rider. The coverages and benefits are the same, it would just cost you a few extra dollars per month.

If you don’t have life insurance, that is when an individual AD&D insurance policy can step in. Individual AD&D insurance is even more affordable than a regular life insurance policy, although the coverage is not as wide.  

Who Should Have AD&D Insurance?

AD&D insurance is often very affordable, with rates as little as a few dollars per month. If you can afford this insurance, it can’t hurt!

However, this insurance is particularly useful for those with a family. If your family is dependent on your income to sustain the quality of life amongst the family, having insurance to protect that is very important! You should have AD&D insurance if:

  • Your family would suffer financial hardship if you were not able to bring home income (either from a disability or accidental death) 
  • The insurance is offered for free, or at a heavy discount, through your employer 
  • If you have a risky job (such as someone who cuts trees or works on power lines) 

How To Get AD&D Insurance

If you’re interested in getting AD&D insurance, you may be pleased to hear this insurance is not contingent on a health exam. Considering the fact that AD&D insurance does not cover the death from a natural cause, such as a medical condition, insurance companies are not too concerned about your health status before issuing this insurance. 

Working with an insurance agent, or going through an online portal, is the easiest way to get AD&D insurance. The application process is straightforward and easy to complete, and you’ll be covered in no time! 

Example of Accidental Death 

There are many examples of an accidental death. Someone dying from a car crash is one of the accidental death causes an insurance company would cover.

As long as the one who was killed was not drinking alcohol and driving, this tragic death would be covered by AD&D insurance. 

Benefits of AD&D Insurance 

There are numerous benefits of AD&D insurance.

Financial Benefits 

If you have a family who relies on your income, having AD&D insurance can help financially protect your family if you suffered from an accidental death or dismemberment. 

Easy to Obtain 

AD&D insurance is typically rather affordable, and does not require a medical exam. 

Easy to Cancel 

Coverage is also easy to cancel. If you no longer need AD&D insurance, or want to cancel for really any reason, you shouldn’t have trouble doing so. 

Advantages of AD&D Insurance

AD&D insurance’s biggest advantage is the cost to payout ratio. In the event this insurance ever needed to be used, the beneficiary would receive a meaningful payout, and it wouldn’t have been a tremendous cost to the policyholder. 

Disadvantages of AD&D Insurance

With all the benefits and advantages of AD&D insurance explained, there are also some disadvantages. Most notably, that accidental death and/or dismemberment is not common.

It certainly does happen, but you are far more likely to die from natural causes than an accident. For that reason, you may carry this insurance for 50-60 years, and your beneficiary may never receive any benefit.  

What is the Difference Between Life Insurance and AD&D?

AD&D insurance is closely related to life insurance, but there are some key differences. What is the difference between life insurance and AD&D insurance?

Simply put, life insurance is more complete than AD&D insurance. Life insurance is typically all encompassing, and will even pay a death benefit if one would die from natural causes. Additionally, a whole life insurance policy builds in cash value, and the policyholder can draw against that cash value at a later date in the future.

AD&D insurance is certainly useful, but it has a much more narrow focus. AD&D insurance will pay a death benefit if the policyholder died from an accident, such as a car accident, and will also pay a benefit if the policyholder lost one, or all, of their limbs in an accident. However, AD&D insurance does not build a cash value. 

Insurance Policies Are Like Tools in a Tool Chest 

Look at all insurance policies as tools in a tool chest. You want to make sure you have enough tools to complete the job correctly, or protect yourself and your loved ones. But, you do not need to have an excess amount of tools.

Working with a financial advisor is a great way to make sure you have the right tools to complete the job. Not only will financial advisors help you manage your investments, they will also help manage your risk.

Risk includes accidental death or dismemberment. Financial advisors often work very closely with insurance products, and can take a holistic view of your total financial picture. AD&D insurance may be the perfect option for you and your family, or perhaps a more robust insurance product – such as whole life insurance, is really what you need.