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What Is AD&D Insurance?


The “AD&D” in AD&D Insurance stands for “Accidental Death and Dismemberment Insurance.” Nice, right? AD&D insurance is like a combination of life insurance and disability insurance…except that it combines more limited versions of both forms of insurance. Not all forms of death are covered, and not all forms of disability are covered either. 

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AD&D insurance is available in stand-alone policies or as a rider on a regular life insurance policy. In either form it’s relatively inexpensive, but the affordability comes with slim coverage for death and dismemberment.


Yes, dismemberment. It’s not a word that comes up often in day-to-day conversation. In fact, special coverage for dismemberment is probably a throw-back to when more of the American workforce was in the manufacturing sector, working with machines that could take a limb or an eyeball.

It sounds macabre, but AD&D payouts work by “member.” So, if you lose two hands you get more than if you lose only one. If you lose the sight in one eye and one leg, you get a full benefit, but if you just lose a leg you get 50%. You get the idea. There’s quite a bit of variation among AD&D policies, so always be sure to read the fine print when you’re shopping for polices.

AD&D vs. Disability Insurance

What Is AD&D Insurance?

In most cases, it’s wise to have disability insurance to replace your income if you become too disabled to work. But what about worker’s comp, you say? Remember that worker’s comp only kicks in for employees who are injured or disabled on the job. And sure, federal disability payments exist, but they don’t provide much in the way of income.

Some people are lucky enough to have access to cheap group disability insurance through their employers. For everyone else there’s the private disability insurance market, where policies tend to be very pricey indeed. If you absolutely can’t afford disability insurance, AD&D insurance is a cheaper alternative that at least covers some forms of disability. It’s not a perfect substitute for comprehensive disability insurance, but it’s better than nothing, especially if you work in a high-risk job.

Find out now: How much life insurance do I need?

 AD&D vs. Life Insurance

AD&D insurance stacks up less well as an alternative to life insurance. That’s because it only covers death caused by accidents, not by illness. Some AD&D policies only pay out for deaths that occurred as a result of a covered dismemberment, making them even more restrictive.

If you’re worried about the cost of life insurance, remember that term life insurance for people in decent health is usually very affordable. And with term life insurance you get coverage for lots of different kinds of death, not just accidental death. Young people actually are more likely to die in an accident than from illness, but that’s still not a compelling reason to choose stand-alone accidental death insurance over life insurance. Why pay for less coverage?

But it’s free!

You’re getting AD&D insurance for free? Why didn’t you say so! At SmartAsset, we’re all about taking free money. When we’re not reminding folks to get the most out of matching contributions to their 401(k)s we’re advising on the credit cards with the best rewards. So if you’re offered free AD&D coverage, go for it.

One last thing: When AD&D insurance is an add-on to a life insurance policy, it gives the policyholder what’s called “double indemnity.” If you die in an accident, your beneficiaries get the full value of the payout from your regular life insurance policy, plus the full value of the payout from your AD&D policy. Score! (Just be aware that it was the promise of double indemnity that led Barbara Stanwyck to kill her husband in the famous 1944 film noir called, appropriately enough, Double Indemnity. Don’t say we didn’t warn you.)

The takeaway

What Is AD&D Insurance?

If you have the option of free or very cheap AD&D insurance, there’s no harm in taking advantage of the opportunity. You’re just adding an extra layer of protection for your family. And if AD&D is the only form of disability insurance you can afford, it’s a lot better than no disability coverage at all.

What we don’t recommend is using AD&D insurance instead of regular life insurance, even for people under 35, who are statistically more likely to die from accidents than from disease or illness. It makes sense to opt for the broad coverage of a life insurance policy rather than limit yourself to coverage for accidental death. And if you’re young and healthy, you could lock in low life insurance premiums now and reap the financial benefits down the road.

Alternatively, some people choose to spend any extra money they have for insurance on boosting the value of their life insurance policy rather than buying additional AD&D insurance. Your call.

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