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Do your loved ones rely on your income to survive? If so, it is natural that you want to protect them financially in case you die or are seriously injured and can no longer work.
Many people buy life insurance to ensure that loved ones have the means to pay their mortgages, educate their children, funeral expenses and other expenses. But another type of insurance policy – accidental death and dismemberment (called AD&D) – is also an option.
The threat of death by accident is real. By age 44, accidental injuries (including drug overdoses not covered by AD&D insurance) are the leading cause of death for Americans, according to the Centers for Disease Control and Prevention.
But do you need both traditional life insurance and AD&D? Or just one? Here’s how to decide.
Life insurance against Accident and dismemberment insurance.
Life and Death and Accident Insurance have similarities. The circumstances in which these policies are paid out are what really separates traditional life insurance from AD&D insurance:
- The traditional life insurance policy provides money to the beneficiary you specify, regardless of the cause of death (except for suicide in the first two years of holding the policy).
- AD&D insurance policy pays only for accidental death or accidental injuries that meet the requirements of the claim.
Traditional life insurance
Traditional life insurance includes term life insurance, comprehensive life insurance and universal life insurance. These types of life insurance pay death benefits, which can replace your income and help survivors pay mortgages, college tuition, or other important bills.
If you choose a lifelong policy or a universal life policy, there is the potential to accumulate monetary value based on the performance of an index or investment account.
Traditional life insurance policies often require a medical examination for life insurance and you may be denied coverage.
Your beneficiaries can receive a life insurance payment if you die from an accident, heart attack, cancer, pneumonia, Covid, another illness or just old age.
Accidental death and dismemberment insurance
Death by accident and dismemberment insurance can also provide important resources for your family if you die as a result of an accident (not due to natural causes or illness). For example, AD&D will cover deaths from a bus accident, but will not cover deaths from heart attack.
With AD&D insurance, your loved ones can also be reimbursed if you are seriously injured but not killed.
For example, AD&D insurance can be paid out if you suffer an injury that:
- It makes you lose the ability to speak or hear
- It paralyzes you
- The result is limb loss
Some events may not be eligible for AD&D payment if there are injuries or deaths related to:
- Extreme sports such as skydiving and scuba diving
- Suicide or self-inflicted injuries
- Mental illness
- Alcohol or drug use
AD&D insurance does not require a medical examination and, if you meet certain minimum requirements, you will not be denied coverage.
Types of AD&D insurance
Accidental death and dismemberment policies may vary depending on the exact causes of death and injury to be covered. The rules will specify exactly which types of events are eligible for payment.
For example, one policy may be paid in the event of a death related to a firearm incident and another may not.
In addition, a variant of AD&D insurance – “accident insurance” – is only paid out if an accident leads to your death. Serious injury is not covered by accident insurance.
Some AD&D policies have options to cover both spouses and dependents. Or you can qualify for employer-based business travel accident insurance, which pays off if you are injured or killed while traveling on business.
Comparison between life insurance and AD&D.
Do you need to buy AD&D insurance?
Death by accident and dismemberment insurance and standard life insurance are both types of life insurance, but one does not replace the other.
Due to the limitations of AD&D insurance payments, you should not rely on AD&D insurance to cover the needs of a growing family or business. If you decide to buy only one type of life insurance, it should be a traditional life insurance because it covers much broader causes of death.
To achieve maximum life insurance, you may want to consider purchasing both types of life insurance. AD&D insurance can be a cheap addition to a traditional life insurance policy. Sometimes AD&D is offered by an employer for free or at a low price.
If you purchase a traditional life insurance policy, you may be able to add AD&D life insurance and receive additional coverage without purchasing a separate policy.
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