What Is AD&D Insurance?

Accidental death and dismemberment insurance (AD&D) is coverage for accidental death or injury to the insured. “Dismemberment” usually covers the loss of a limb, paralysis, or the loss of hearing or eyesight.

AD&D is typically not offered as part of a standard insurance plan and is considered to be a rider, or an added feature, that the insured must pay extra for. Some employers offer voluntary AD&D to their workers employed in a dangerous field where they are susceptible to physical harm, such as mining.

How Does AD&D Insurance Work?

AD&D policies usually have a schedule that outlines the terms of various benefits and coverages. Accidental death will usually be defined by extraordinary circumstances such as traffic accidents, homicide, falls, heavy equipment, drowning, or death due to weather-related incidents.

In the event of accidental death or permanent injury of the insured, the policy benefit is paid out to the insured or the beneficiary(ies). The AD&D rider to a life insurance policy is usually a double indemnity rider, meaning that the insurance company agrees to pay double the face amount of the policy under certain conditions.

In the event the insured dies in an accidental manner, the designated beneficiaries receive benefits from both the original insurance policy and the AD&D rider. Typically, the AD&D amount will be the same as the face value of the policy. Insurers often cap the amount they will pay out in this situation.

In the event of dismemberment, the AD&D policy typically pays a percentage for the loss of a limb, partial or permanent paralysis, the loss of use of specific body parts, or the loss of sight, hearing, or speech. Each policy has a unique set of conditions set by the insurance company. A policy will typically not pay out its full benefits for dismemberment unless a combination of conditions has befallen the insured.

What Is Not Covered by AD&D?

The insurer will list certain events and circumstances in the AD&D rider that are excluded from coverage, typically including war, suicide, illness, or natural causes.

Death resulting from an overdose of toxic substances or while under the influence of nonprescription drugs is also a common exclusion. If the insured’s death or dismemberment occurs because of the insured’s own criminal act, no benefit is payable.

What Is the Difference Between Life and AD&D Insurance?

Life insurance is straightforward: If you die while the policy is in force, your insurer will pay the stated death benefit to your beneficiaries.

Typically, the only exceptions occur during the early years of a policy when the company can refuse payment if you've misled them in your application for coverage. In comparison, AD&D protection has less real value, because there are so many conditions on—and exceptions to—paying the benefit.