At first glance, life insurance and accidental death and dismemberment insurance might seem like roughly the same thing. However, they are actually quite different and will protect you from different catastrophes. There may be instances where you need both, but for many people, you would only need one or the other, depending on factors like your lifestyle and your budget. Some people may not need either type of insurance. Here’s a complete comparison of life insurance and accidental death insurance.
What is accidental death and dismemberment?
An accidental death and dismemberment policy covers your death only if you are involved in an accident, as the name suggests. Your beneficiaries will receive the payout only if you pass away in something like a car accident or an airplane crash, or some similar incident. You will also receive a partial payout if you are injured or incapacitated in some way after an accident. For example, you will likely receive a payout if you lose the ability to hear, speak, or see, if you lose a limb, if you lose the ability to walk, or another serious injury that prevents you from functioning normally. Keep in mind that some things that may seem ‘accidental’ are not typically covered under an accidental death and dismemberment policy. For example, you usually will not receive a payout for a car accident if you were driving drunk, or death by a drug overdose.
What is life insurance?
Life insurance is far more comprehensive than accidental death and dismemberment insurance. It will cover your beneficiaries in the event of your death regardless of the cause. It’s important to remember that every type of life insurance is different, so what may result in a payout for one company may not for another organization. For example, some companies won’t cover death by suicide for a certain number of years after purchase the policy. Life insurance is also different from AD&D insurance in that it does not pay out for injuries.
Benefits of AD&D Insurance
There are a few reasons why you might consider investing in AD&D insurance. You can either choose to buy it on its own or add it as a rider to your existing life insurance policy. If you have a high-risk lifestyle or you are particularly concerned about being in an accident, AD&D insurance can give you some peace of mind. You might opt to get AD&D insurance on its own instead of life insurance if you are young and you don’t anticipate getting an illness, but still want protection for your family in the event of an accident. AD&D insurance policies on their own are often cheaper than a life insurance policy, so it may be a smart option if you don’t have a large budget for insurance. AD&D insurance also insures that you will be financially protected if you get seriously injured in an accident. Many companies offer AD&D policies for free to their employees if they purchase a life insurance policy. If this is an option available to you, AD&D insurance is a good bet to add to your existing coverage.
Downsides of AD&D Insurance
There are some downsides of getting AD&D insurance. If you already have life insurance, it may not be the most prudent financial decision to add AD&D insurance to it. This is because your life insurance policy will probably cover most of the same things that your AD&D insurance does. The only difference is the coverage for injuries.
It’s also important to note that there are many cases where you might die from an accident and still not qualify for an AD&D payment. For example, you might be injured in an accident and receive the partial payout, but if you die several months or years later, you may not get the full death benefit. This is because insurance companies usually have a time frame in which you must die in order to qualify for the benefit.
There are also many insurance companies who won’t pay out on an AD&D policy if you got in the accident due to high risk behavior. For example, if you die during a skydiving accident, racing a car, riding a motorcycle, or another similar endeavor, your company may choose not to pay out. If you do opt to get AD&D insurance, be sure to sit down with a representative from your company to make sure you are completely clear on what the policy covers and what it doesn’t.
Finally, you should also keep in mind that your likelihood of dying from an illness is much higher than dying from an injury. A huge percentage of people that get AD&D insurance never receive the payout, so in many cases, the investment just isn’t worth it. It’s typically better just to invest your money in a comprehensive life insurance policy.
Benefits of Life Insurance
There are many benefits to getting a comprehensive life insurance policy. You can opt for a whole life policy, which provides indefinite coverage, or a term policy, which covers you for a certain period of time. Term policies are typically much more financially prudent, as they are more affordable and can be renewed easily. Life insurance will provide your family and other beneficiaries with the money they need to continue after your death. Typically this covers funeral expenses and living expenses for anyone you may have been supporting. With life insurance, your beneficiaries will get the payout regardless of how or when you die, so it is much more reliable than AD&D insurance.
In general, it’s best to start with life insurance and only add on accidental death and dismemberment insurance if it’s affordable. The only instance in which you might want AD&D insurance on its own is if you are in very good health and feel extremely confident that you won’t die from an illness. Before you get any insurance policy, be sure to talk to a professional to learn more about your options.