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Life Insurance vs. AD&D: The Differences Explained

Dana George
Robin Hartill, CFP

Our Insurance Experts

Eric McWhinnie
Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.

Choosing the perfect life insurance policy involves important decisions. In addition to deciding how much coverage you require and how much you can afford, you'll likely be asked if you're interested in AD&D life insurance. While a standard life insurance policy covers you in most manners of death, AD&D life insurance only provides a death benefit if you die as the result of an accident. Here, we'll explain the difference between life insurance and AD&D to give you the confidence to purchase the right policy.

What is life insurance?

In short, life insurance represents an agreement between an insurance company and a policyholder. As the policyholder, you agree to make premium payments, and the insurance company promises to pay out a death benefit to your beneficiaries when you die.

Life insurance coverage comes in all shapes and sizes. There's term life insurance, a policy that is in effect for a predetermined number of years. And there are permanent policies like universal and whole life insurance, designed to remain in effect as long as premiums are paid.

While some life insurance policies have an accelerated death benefit, which allows you to receive a portion of your death benefit while you're alive if you're diagnosed with a terminal illness, typically, a check is not written until you pass away.

What is not covered by life insurance?

For most people, the primary reason to purchase life insurance is to make sure their loved ones are taken care of after their death. Policyholders count on that protection for their beneficiaries. However, life insurance does not always pay off. Here are some of the circumstances under which an insurer may not make payment:

  • Suicide: Depending on the state of residence and the policy, beneficiaries may not receive a death benefit if the policyholder commits suicide within a specific window of time. For example, if the holder commits suicide in the first two years of a policy, beneficiaries may only receive a refund of premiums paid.
  • Lying on application: If the policyholder dies, the insurance company may investigate, and if it learns, for instance, that the deceased lied about smoking, it can deny payment. The same is true if a person lies about any other risky activity, like being a mountain climber, skydiver, or even a part-time mercenary.
  • Breaking the law: Imagine that a policyholder is killed committing a crime, like robbing a bank. The life insurance company has the right to deny payment.
  • War death: It can be tough for a journalist who covers wars to score life insurance, because insurance companies are all about risk. Or say you're from a war-torn country and travel home regularly -- you may come under the war exclusion included in most life insurance policies.

Note: American policyholders who move to another country should check with their insurance company to make sure their policy will stay in effect no matter where they live at the time of their death.

What is accidental death & dismemberment (AD&D) insurance?

AD&D stands for "accidental death and dismemberment" insurance. Like a life insurance policy, AD&D life insurance pays a policyholder's beneficiaries a set amount upon their death -- but with this insurance, death must be a direct result of an accident.

If a policyholder does not die in an accident but loses a limb or a major function like the ability to speak, see, or hear, AD&D pays the policyholder a specified amount.

Life insurance vs. AD&D insurance: What's covered

AD&D is a specific type of life insurance. While a standard life insurance policy pays out for most types of death, AD&D life insurance only pays a death benefit if you die in an accident or as the result of injuries from an accident. Many policies also pay a smaller benefit if your accidents result in the loss of a limb or you lose your ability to speak, see, or hear. This chart gives you a breakdown of whether certain types of claims will be covered by life insurance vs. AD&D insurance.

Cause of Death Life Insurance AD&D Life Insurance
Natural causes, like heart attack or cancer Yes No
Death that occurs while you're engaged in criminal activity, e.g., you die while committing robbery No No
Car accident Yes Yes
Overdose Yes No
Death that occurs while you're under the influence of drugs or alcohol, e.g., you die in a car crash while driving drunk Yes No
Suicide Yes (but most policies will only refund premium payments and won't pay the full death benefit if the death occurs during the first two years of the policy) No
Accidental discharge of a firearm Yes Yes
Death while engaging in a risky hobby, like scuba diving or rock climbing Possibly. Some life insurers exclude deaths from risky activities. Also, if you lied about your involvement in high-risk hobbies on your application, your claim could be denied. Probably not. Deaths from risky activities are typically excluded under AD&D policies.

Accidental death & dismemberment coverage

Let's say a policyholder loses an arm in a farming accident. Their AD&D policy covers dismemberment, and their insurer pays them on a "per-member" basis. Any body part that can be lost or critically injured is referred to as a "member." For example, an arm, leg, and foot each represent a different member, and payouts vary by which is lost.

Another difference between life insurance and AD&D coverage is how challenging it can be to prove that a policyholder's loss was due to an accident. When a person dies, it tends to be clear-cut. The same is not necessarily true for injury. To collect AD&D insurance, a person must be able to prove that their injuries were a direct result of an accident.

When it comes to life insurance vs. AD&D, there is one more striking difference. AD&D coverage costs considerably less than a standard life insurance policy, primarily because it pays out under limited circumstances.

What is not covered by AD&D?

Not all AD&D claims pay out. Here are some situations not covered by an AD&D policy:

  • Death resulting from illegal activity
  • "Malfunction of the body," such as someone suffering a stroke while driving
  • Death by suicide, unless the policy has been active for a specified period of time
  • Death that occurs more than one year after an accident

Do you need both life insurance and AD&D?

If you ask yourself, "Do I need both life insurance and AD&D?" you're not alone. Life insurance pays beneficiaries a "death benefit" after the death of a policyholder. Accidental death and dismemberment (AD&D) pays out only if the policyholder dies or is seriously injured in an accident. AD&D coverage can be used as a supplement to life insurance, although it is not necessary.

In terms of financial planning, the priority is to land a life insurance policy with a high enough death benefit to cover the financial needs of beneficiaries. Looking at life insurance vs. AD&D, one thing is clear: Whether it's term life or permanent, no life insurance policy insures against dismemberment, paralysis, or the loss of a bodily function like AD&D coverage does.

As a result, an AD&D policy can complement life and health insurance policies. Health insurance helps keep policyholders healthy, and life insurance gives them peace of mind, knowing their loved ones will be on solid financial footing if they die. AD&D fills the gap by providing a payout to a policyholder who is severely injured, and, if that person dies, providing an additional death benefit.

How to buy AD&D and life insurance

There are several options for purchasing both AD&D coverage and life insurance.

Voluntary life and AD&D from work

Many employers provide both life insurance and AD&D coverage as a company benefit. Taking advantage of employer-sponsored insurance is a good way to secure coverage at a low price, and often without a medical examination requirement.

Open market

Buying life and AD&D coverage begins with shopping around. Just as a person is unlikely to buy the first house they see or the first car they drive, it makes little sense to buy an insurance policy without comparing it to others.

The best insurance companies help potential customers compare information about rates, restrictions, benefits, and supplemental life insurance. Here are a few other hallmarks of a great insurance company:

  • Agents who provide all the information to make a good decision without applying pressure to buy
  • A strong financial rating from the four major insurance company rating agencies: AM Best, Moody's, Standard & Poor's, and Fitch
  • Reputation for excellent customer service

When it comes to life insurance vs. AD&D coverage, both have a place in financial planning, and each can be useful in the event of the unexpected.


  • Yes, if a policyholder dies in an accident, their estate can claim both life insurance and AD&D death benefits.

  • Life insurance only pays more for an accidental death if the policyholder carries supplemental AD&D coverage. Supplemental life and AD&D insurance go hand in hand, normally at an additional cost.

  • If a person loses a limb in an accident, the payout may be precisely what they need to get through financial strain. And even if a policyholder never needs their AD&D policy, the purchase was worthwhile if it gave them peace of mind. In one way, the question of accidental death and dismemberment vs. life insurance is moot, because it depends on an unknowable future.

  • As the name suggests, accidental death insurance covers death resulting from accidents. In other words, the departed did not get sick or intend to kill themselves. For example, this might include dying in a fire, car accident, or fall.

  • Payouts vary by the insurance company. Here's a sample of how FBMC Benefits Management pays out:

    • Loss of life: 100%
    • Total paralysis of arms and legs: 100%
    • Loss of any combination of two (hands, feet, or eyesight): 100%
    • Loss of speech and hearing in both ears: 100%
    • Total paralysis of both legs: 50%
    • Total paralysis of arm and leg on one side of the body: 50%
    • Loss of one hand, foot, or sight in one eye: 50%
    • Loss of speech or hearing in both ears: 50%
    • Loss of thumb and index finger on the same hand: 25%

    Let's say a person purchases an AD&D policy worth $100,000, is in an accident, and both legs are paralyzed. That person can expect a payout of $50,000.