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If you’ve been thinking about estate planning or looking into the many different types of insurance policies that provide a death benefit, you probably came across the acronym AD&D at one point or another.
You might’ve also learned that it stands for accidental death and dismemberment insurance and that it’s an insurance policy that provides benefits to be paid in the event that the insured is involved in an accident.
What you might not have realized, though, is that if the accident causes the insured to die, the benefit will go to the beneficiary. But if they live through the accident and it causes them to be dismembered in some way, they themselves will be the recipient of the benefit.
This type of insurance for accidental death is sometimes mistakenly thought to be accidental death and disability insurance, but that’s not exactly true. Yes, the point of it is to help protect you financially if you’re seriously injured, but it is not disability insurance.
Likewise, even though AD&D insurance provides an accidental death benefit, it’s not the same as a policy such as the accidental death insurance sold by Fabric. It's also distinct from term life insurance, which covers you in case of accidents and illnesses, too. (Check out term life insurance sold by Fabric.)
An accidental death in the context of an AD&D insurance policy is a death due to an unforeseen circumstance or event unrelated to your health. This means that the insured’s death can’t be caused by or related to an illness.
Above and beyond accidental death coverage, the nice thing about AD&D insurance policies, is that they also provide a benefit if the insured were to accidentally be dismembered in some capacity. Typically, in this case, the insurance policy would provide a portion of the benefit payable that corresponds to the severity of the dismemberment, or the degree of loss, also known as a scheduled benefit.
How does a scheduled benefit actually work? Each policy might be a little different, but as an hypothetical example, let’s say the insured lost an arm or a leg. In this case, the insurance policy pays half of the death benefit.
If the insured lost two or more limbs (both arms, an arm and a leg, etc.), the policy pays the full death benefit. Bear in mind, once the full benefit of a policy has been paid out, the policy likely then terminates because the entire face value has already been paid in benefits.
It’s worth noting that some AD&D insurance policies cover sudden loss of vision (and occasionally hearing), too. The same rules as above apply here. If vision’s lost in one eye, the insurance policy might pay half of the death benefit; total blindness, and the full benefit would be paid.
|Accidental injury||Percent of benefits payable|
|Loss of hearing in one ear||50%|
|Loss of vision in one eye||50%|
|Loss of a limb (arm or leg)||50%|
|Total loss of hearing in both ears||100%|
|Total loss of vision in both eyes||100%|
|Loss of two or more limbs (arms and/or legs)||100%|
|This is a hypothetical example shown to illustrate how a scheduled benefit works. This is not specific to any particular product. Each policy will have specific details that may vary from what’s shown here.|
With AD&D insurance, if the policyholder meets the age requirements, they’re guaranteed approval regardless of their health. The coverage is instant and no medical exam is needed.
When it comes to the benefits that are paid, in the event of an accidental death, the beneficiary collects the money. In the event that the insured lives but has suffered an injury (one that’s covered by the policy), they would be the one to collect the amount payable.
There are lots of different kinds of insurance policies (even mortgage protection insurance is a kind of life insurance, at the end of the day). Before we jump into the comparison of the difference in losses covered by AD&D, AD and term life, let’s briefly go over what life insurance is, since we’ve already spent some time on both accidental death and AD&D policies.
Term life insurance provides a death benefit that covers both accidental death and death caused by illnesses. Suicide, however, is one exception that’s typically not covered until after the first two years of owning a policy. This type of life insurance is often medically underwritten and requires a physical exam.
The length of term policies vary, often from 10 years to 30 years, depending on the specific policy. Fabric, for instance, sells a term life insurance policy that you can apply to upgrade to from the accidental death policy offered by Fabric.
When you broadly compare term life insurance and accidental death insurance to AD&D, it jumps right out that there’s some overlap when it comes to coverage:
|Losses Covered 1||AD&D insurance||AD insurance||Life insurance|
|Loss of a limb||X|
|Loss of sight||X|
|Coma or paralysis after an accident||X|
|Death due to an accident||X||X||X|
|Death due to illness||X|
|Death due to old age||X|
|Death due to drunk driving||X|
|Death due to drug overdose||X|
|1 Exclusions and details will depend on each policy. Any policy should be closely reviewed before making a decision.|
Even though there are some similarities, AD&D (or accidental death insurance, for that matter) shouldn’t be purchased as a replacement for either type of insurance. Instead, both accidental death and AD&D insurance could be purchased as supplemental life insurance and/or disability insurance alternatives.
Often times there are certain, specific circumstances that are covered by the policy. Death caused by a traffic accident, fall, drowning, exposure to the elements, an accident involving heavy equipment, and sometimes even homicide can be among those covered.
What’s worth noting here is that if you're 25-34, you are 4.5 times more likely to pass away from an accident than from cancer. In fact, according to the CDC, accidental death is your single greatest risk between the ages of 25-44(2).
An easier way to answer this question would instead to ask what doesn’t it cover? Remember, if the insured dies and it’s because of or related to an illness, it won’t be covered. This means that the death or injury can’t be a direct result of an accident related to another cause.
Here’s an example to put all of that into context. If an insured has a heart attack while driving and gets into a car crash because of the heart attack, their death (or injury) might not be covered by their accidental death coverage (or AD&D insurance).
Another typical stipulation is that the death needs to have occurred within a certain amount of time after the accident in order for the death benefit to be received. The amount of time is determined by and outlined in the policy.
What else is spelled out in the policy? The policy is where you’ll find the list of exclusions and exceptions. Most often, for AD&D insurance, the list will include (but isn’t limited to) certain staple exclusions such as:
Any form of aeronautics (except as a fare-paying passenger in a regularly scheduled and commercial aircraft)
Committing a felony or engaging in an illegal occupation or activity
Any physical or mental illness not caused by an injury
An injury incurred prior to coverage
Participation in any professional sport for pay or profit
Drug overdoses and deaths that occur while under the influence of nonprescription drugs
Participation in war
In addition to this list, depending on the specific policy and the state that you live in, there will likely be other exclusions as well. Many times “risky” activities and behaviors are excluded, too. These can include adrenaline-fueled things like skydiving and car racing.
Each state’s specific definitions of what is and isn’t excluded can vary with these types of activities, especially. This is true for AD&D insurance and accidental death insurance alike.
Again, let’s flip the question around, and instead, take a look at some of the accidental death coverage exclusions for Fabric in a handful of states to highlight these nuanced differences.
|State specific exclusion 1||CA||GA||NC||NY||TX|
|Racing (professional or non-professional)||X||X||X||X|
|Riding in or on, or being struck by, a motorized vehicle not designed for streets or highways||X||X||X|
|1 Not a comprehensive list of exclusions. Go to /whats-covered to learn more|
Other common exclusions to accidental death coverage could be deaths occurring during surgery, or if the insured has a bacterial infection or a mental or physical illness. While neither AD&D insurance nor an accidental death policy fits the bill if you’re looking for something that provides coverage for illnesses, a term life insurance policy does.
Term life insurance policies such as the one offered by Fabric cover both accidental death and death caused by illness.
Insurance for accidental death and other related losses is often attractive to young people. Why? Remember, people between the ages of 25-44 are statistically more likely to die from an accident than from an illness. Within this age range, a lot of people might not have disability insurance.
If an accident occurs, as long as the type of accident isn’t one that’s excluded, the benefits of an accidental death policy can help your family replace lost income. An AD&D policy can be especially useful for those whose job depends on physical capabilities.
AD&D insurance rates can be much lower than average life insurance rates. That said, especially if you're young and healthy, you may be able to get a similarly good rate for term life insurance. (Check out Fabric's term life insurance quotes to get a sense.)
As with any type of insurance, it’s important to read all of the available information before buying a policy.
This means you should do your due diligence to learn about any insurance policies that you’re considering including in your family’s financial plan. If you have questions about your specific situation, reach out to us through Support and we’ll connect you to chat with one of our licensed insurance agents.
In many cases, you don't need both term life insurance and AD&D insurance. If you have a sufficient term life policy, it would cover your passing from the same causes as an accidental death policy.
If you're looking for a broader scope than just coverage of death caused by accidents, then term life insurance may be a good fit. (Learn more about term life insurance through Fabric.)
Generally speaking, no. AD&D insurance covers death caused by accidents (think: car crash), not illnesses (think: cancer). You might be able to add riders to change the nature of your coverage, but if you're looking for broader protection, term life insurance may be a better fit.
Because AD&D policies only cover accidental deaths and not those caused by illnesses, pandemics and other infectious diseases would typically not be covered. If you're looking for coverage against illnesses and infectious diseases, you might want to check out term life insurance instead.
Ready to get a little morbid? Accidental deaths could include car crashes, slip and falls, drowning, fire and other deaths caused by situations beyond your control and not related to your health.
Because accidental death and AD&D insurance aren't medically underwritten, you don't need to undergo a life insurance health exam.
You might find some insurers who offer perks like an additional benefit paid out if you were to pass away in a car accident while wearing a seatbelt. Others might provide benefits to help your kids pay for college; you may also be able to add benefits around counseling and legal services your surviving spouse. Check with your insurer for details.
Accidental death and AD&D insurance doesn't require a health exam, so that could be a plus if you want to avoid the inconvenience or if you don't think you would be approved for a medically underwritten life insurance policy. You won't be denied because of your health, since these policies don't cover death related to an illness. You can also gain coverage very quickly since there's no long underwriting process or health exam.
The biggest downside is the limited coverage. If you want more comprehensive coverage, term life insurance may be a better option. While AD&D insurance tends to cost less than term life, the difference in premiums isn't always tremendous. Additionally, the risk of your policy paying out is significantly reduced because it doesn't cover illness-related deaths.
With Fabric, you might be able to get an accidental death insurance policy for as little as $6 a month.
This type of coverage can be purchased either as a standalone policy or as a rider on a life insurance policy. It can be purchased as an individual policy or sometimes through your place of employment, as part of a group policy. AD&D is often issued by major insurers, sometimes through offers from a bank or credit union. And, of course, Fabric sells an accidental death policy.
(2) CDC: National Vital Statistics Report, Volume 64, Number 2. (February 16, 2016), Table 9
Fabric exists to help young families master their money. Our articles abide by strict editorial standards. This article has been reviewed and approved by a compliance professional who is a licensed life insurance agent.
This material is designed to provide general information on the subjects covered. It is not, however, intended to provide specific financial advice or to serve as the basis for any decisions. Fabric Insurance Agency, LLC offers a mobile experience for people on-the-go who want a easy and fast way to purchase life insurance.
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Accidental Death Insurance policies (Form VL-ADH1 with state variations where applicable) and Term Life Insurance policies (Form ICC16-VLT, ICC19-VLT2, and CMP 0501 with state variations where applicable) are issued by Vantis Life Insurance Company (Vantis Life), Windsor, CT (all states except NY), and by The Penn Insurance and Annuity Company of New York (NY only). Coverage may not be available in all states. Issuance of coverage for Term Life Insurance is subject to underwriting review and approval. Please see a copy of the policy for the full terms, conditions and exclusions. Policy obligations are the sole responsibility of Vantis Life.
All sample pricing is based on a 25-year old F in Excellent health for the coverage amount shown. All samples are for a 10-year term policy, unless otherwise stated. Term Life Insurance policies (Form ICC16-VLT, ICC19-VLT2, and CMP 0501 with state variations where applicable) are issued by Vantis Life Insurance Company (Vantis Life), Windsor, CT. Coverage may not be available in all states. Issuance of coverage for Term Life Insurance is subject to underwriting review and approval. Please see a copy of the policy for the full terms, conditions and exclusions. Policy obligations are the sole responsibility of Vantis Life.
A.M. Best uses letter grades ranging from A++, the highest, to F, companies in liquidation. Vantis Life’s A+ (Superior) rating, which was reaffirmed in April 2020, ranks the second highest out of 16 rankings. An insurer’s financial strength rating represents an opinion by the issuing agency regarding the ability of an insurance company to meet its financial obligations to its policyholders and contract holders and not a statement of fact or recommendation to purchase, sell or hold any security, policy or contract. These ratings do not imply approval of our products and do not reflect any indication of their performance. For more information about a particular rating or rating agency, please visit the website of the relevant agency.
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