Accidental death and dismemberment insurance is a type of life insurance with limitations on when it will pay out.

If you're shopping for life insurance, or are enrolling for benefits at work, you may have run across accidental death and dismemberment (AD&D) insurance. AD&D insurance typically:

  • Pays the full amount if you die accidentally, such as in a car crash or plane wreck.
  • Pays the full amount if you lose speech and hearing in both ears.
  • Pays out partial amounts (such as 25% or 50%) if you lose eyesight, a finger, thumb or a limb, or are permanently paralyzed. The policy will specify how much is paid for each cause.
  • Does not pay anything if you die from illness or disease, such as a heart attack or cancer. 

What's usually covered by AD&D insurance

Other reasons AD&D insurance won't pay any money

Check the policy for specific exclusions, which will vary by company. AD&D often won't pay anything for death or injury caused by:

  • Suicide
  • War (declared or undeclared)
  • Intentionally self-inflicted injury
  • Being intoxicated
  • Voluntary consumption of poison, a chemical or drugs (except when prescribed by a doctor)
  • Getting on, leaving or being in an airplane unless you're a fare-paying passenger on a commercial aircraft
  • Participating in an assault, felony or riot
  • Medical or surgical treatment

AD&D insurance through work

If you can get free or very inexpensive AD&D insurance through work, it's worth signing up because of the low cost.

You generally won't have to answer any health questions to get AD&D coverage at work. You'll name a beneficiary, such as a spouse, just as you would with a regular life insurance policy. The beneficiary gets the money if there's a death payout. You get the money if there's payment for an injury like loss of a finger.

AD&D insurance at work is generally offered in multiples of your annual salary. You might also be able to add a spouse or children for coverage.

The coverage will end when you leave the job, at a date specified by the policy.

For example, accidental death insurance at work could end:

  • When the entire group policy ends
  • The date the last period ends that was paid for
  • The date your employer terminates AD&D insurance for everyone in your group. (Your employer can't end AD&D coverage just for you.)
  • The last day of month in which your employment ended

AD&D coverage might even provide extra payment under certain circumstances, like if you die in a car accident but were wearing a seat belt.

If your employer doesn't offer AD&D coverage, you can buy it on your own. Companies such as AIG, Fidelity Life, Mutual of Omaha, Securian, Sun Life and Transamerica sell individual accidental death insurance policies.

AD&D insurance vs. life insurance

The advantages of AD&D insurance are often its price and that it's easy to get. But the main disadvantage is the major gap in coverage it leaves: It won't pay out anything for death due to illness or disease.

You may see promotions for AD&D insurance that mention unintentional injury is the leading cause of death for people age 25 to 44 -- and that's true, it's the No. 1 cause of death for everyone ages 1 to 44, according to the CDC. But more people total die from illnesses and disease each year. And beginning at age 45, cancer and heart disease are the leading causes of death -- and will not result in an AD&D insurance payout.

If your family would be in a financial bind if you died unexpectedly, term life or permanent life is a better choice. That's because these types of life insurance pay out whether death is due to accident, illness or injury. You can also typically buy much higher amounts of term and whole life insurance than you get in AD&D coverage.

AD&D can be a good supplement to life insurance, but it's not a replacement.