What is covered by AD&D insurance?
Accidental death and dismemberment (AD&D) insurance pays out if you die due to an accident (like a car crash) or if you become paralyzed or lose a limb, hearing, sight or speech.
AD&D does not pay out if you die due to illness, disease or old age.
And AD&D policy will spell out what it will pay in a variety of circumstances. For example, a policy might:
- Pay the full amount if you die accidentally.
- Pay the full amount if you lose speech and hearing in both ears.
- Pay 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.
Is homicide considered accidental death?
Homicide is usually considered an accidental death for AD&D insurance, unless you were committing a crime or in combat when killed.
Exclusions to AD&D insurance
In addition to illness, diseases and old age, AD&D insurance typically 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.
Is AD&D insurance necessary?
AD&D insurance likely isn’t necessary if you have a regular type of life insurance such as term life or whole life. These policies will pay out no matter what the cause of death (with a common exclusion of death by suicide within the first two years of owning the policy).
If your family would suffer financially if you died, a regular policy like term life insurance is a smarter choice because it covers more causes of death.
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 usually 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.
AD&D can be a good supplement to regular life insurance, but it's not a replacement.