MoneyLife

Accidental Death and Dismemberment vs Life Insurance: What’s the Difference?

By LaKenya Hill
Accidental death and dismemberment vs life insurance

Accidental death and dismemberment coverage might be offered as part of your next benefits package. This type of coverage helps pay for numerous injuries stemming from accidents, and in some cases, it will cover accidental death expenses as well, providing you or your beneficiary with a payout. 

Sometimes, accidental death and dismemberment coverage is a free feature, meaning you will just sign up for the coverage because it’s already part of your life insurance plan or policy. But you might be wondering, “what’s the difference between accidental death and dismemberment vs life insurance?” Let’s find out! 

What does accidental death and dismemberment mean?

Accidental death and dismemberment (AD&D) insurance is a feature that gets added to life insurance policies for the purpose of covering injuries stemming from accidents. It is basically two types of coverages in one, including both an accidental death policy and a dismemberment policy. 

The accidental death policy is exactly what it sounds like. In other words, it’s a policy that is paid out if the policyholder dies as the result of an accident. Accidental death refers to incidents such as car crashes, slips, machinery-related injuries, and actual death. 

On the contrary, a dismemberment policy is paid out if the policyholder loses a limb as the result of an accident. Loss of sight and speech impairments are also examples of accidents that would be covered under a dismemberment policy. 

There are some circumstances that are not covered by an AD&D policy. High-risk activities, death by suicide, and death caused by most illnesses are some events that are not covered by an AD&D policy. 

Essentially, if an event is not deemed an accident, it is not going to be covered by AD&D. The cost of an AD&D plan will vary by age, typically increasing as you age, but overall, these policies tend to be affordable features that are added onto an existing life insurance plan. 

What is life insurance?

Life insurance is exactly what it sounds like! It’s a type of insurance that is paid out to a beneficiary when the policyholder of the insurance plan dies. It is a great way to support your family after you die because your plan can help them cover funeral costs, expenses, debt, and even groceries. 

The key that many have to consider with a life insurance policy is how much they can afford to pay into the policy in order to keep it active. There are a few factors that can impact the cost of maintaining a life insurance policy. 

Some things to consider include the length of the policy, how much you want paid out at the time of your death, and your risk, which is determined by your age as well as your health status. There are a few options when it comes to life insurance policies, but some of the more popular policies include whole life and term life insurance policies. 

Whole life insurance is a permanent life insurance policy that covers the insured for their entire life, as long as the policy is paid. On the other hand, term life insurance policies are only paid out during the term of the policy. 

The typical length of a term life policy is anywhere from one to thirty years. But don’t worry! The policy can be renewed. This is the most popular and budget-friendly option when it comes to life insurance. There are quite a few life insurance options out there, so it is important to do your research if you are thinking about investing in life insurance.   

Comparing accidental death and dismemberment to life insurance

So between accidental death and dismemberment vs life insurance, which one do you need? Here are some factors to consider when comparing the two and ultimately deciding which one is better for your situation!  

Loss of a limb 

Did you know that there are an estimated seven million work-related injuries per year? According to the National Safety Council, it’s true! Just imagine undergoing a really unfortunate accident at work, losing a limb, and not being able to work because of it. 

An unfortunate accident of this nature will not be covered by a life insurance policy alone. But fortunately, AD&D will cover the expenses imposed by the event, meaning you could receive a payout if the loss of your limb requires that insurance helps you pay for the related expenses. 

Death by suicide 

It is important to note that AD&D does not consider death by suicide a payable incident. Conversely, most life insurance policies do cover death by suicide, though there are limitations. 

Many life insurance policies include a suicide clause stating that the policy will not cover expenses imposed by suicides that occur within the first two years of the policy. It is very possible that insurance providers will ask for information to help them confirm the cause of death as well, so it is important to be aware of this policy. 

Cost 

Typically, life insurance costs more than AD&D policies. There are a few reasons for these cheaper costs, and these reasons could also be considered some cons of AD&D. 

You might have less coverage with AD&D. Remember that a payout will only happen with deaths that are deemed accidental or in the event of dismemberment cases. With some plans, you’ll only receive 50% of your payout if you lost one limb or the entire payout if you lose more than one limb, so pay attention to the specifics of the clauses.  

Though the monthly payments may be more expensive when you’re paying for life insurance, you’ll receive much more coverage and a larger payout upon the death of the policyholder. Think of AD&D as a supplement to your life insurance policy more than a policy all on its own.  

Coverage 

There are some factors that can cause you to be denied a life insurance policy. Age, risky hobbies, and preexisting health conditions are three examples of circumstances that can ultimately cause you to be denied coverage. 

With AD&D, the only requirement that you’ll need to meet is the minimum age. Most policies require that you are between the ages of 18 and 70 years old. Keep in mind that even though coverage is easier with AD&D policies, it is likely going to be limited.  

More protection means more security

If you find yourself asking, “Do I need both AD&D and life insurance?” the short answer is that it depends. With both AD&D and life insurance, you will equip yourself with additional protection. 

If you consider the advantages and disadvantages of each, it makes sense to have both, especially since the cost of AD&D tends to be lower anyway, so it’s not like you’ll be doubling your costs. But is AD&D worth it? 

Well, it helps to consider your job and lifestyle before deciding if AD&D is worth it. For instance, are you in situations where accidental deaths or dismemberments are possible? If these policies are covered by your employer, there’s no harm in taking on AD&D in addition to life insurance. 

But be sure to consider your life insurance and AD&D plan as a safety net for your financial future. If it does not seem worth it to you right now, you can always set up your own financial safety net with MoneyLion. We offer great ways to keep your money safe and help you stay on top of your finances. 

With our Safety Net feature and MoneyLion Investment Account, you can keep track of where your money is going and prepare for financial emergencies along the way. You’ll get access to your direct deposit up to two days early, and cash advances of upwards of $1,000 with 0% APR can help you as well. Keep your finances protected, prepared, and growing with MoneyLion!

FAQs

Is AD&D insurance worth it?

It depends. If you work a high-risk job, it might be a good idea, especially considering the fact that the cost of AD&D is usually very low.

Do I need both life insurance and AD&D?

Since coverage with AD&D can be limited, it is recommended that you have both life insurance and an AD&D policy.

Is dying during surgery considered an accidental death?

No, dying during surgery is not considered an accidental death. This means that this event would not be covered under an AD&D plan.

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