Life Insurance is different from AD&D in that Life Insurance covers death by ANY reason, whereas AD&D only covers accidental death. The difference in the cost between the two types of policies is because the cause of death is due to illness far more frequently than it is due to accidents; therefore, the Accidental Death and Dismemberment policies can charge less.
They are two different policies. An AD,D policy only covers accidental death and dismemberment. A life insurance policy will pay a death benefit regardless of the cause of death unless specifically excluded. Since ost people do not die as a result of an accident, AD&D policy premiums are far lower than life insurance premiums. An AD&D rider can be added to most life insurance policies.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
Accidental Death and Dismemberment insurance is rarely sold as a “free-standing” policy. It is usually a benefit for membership in an organization. It is a policy that rarely pays any benefit. That is the reason that the cost is so low. It is comparable to buying a homeowner’s policy that will only cover losses due to fire on the third Wednesday in February.
That is a great question! I think that there are a lot of people who are confused about AD&D policies and life insurance. I think that often people assume that the AD&D policy is a cheaper form of life insurance, and therefore can "save" by purchasing one of them instead of the more expensive life policy.
That is sadly not the truth. An AD&D policy will indeed pay if you pass away, but ONLY if your death falls within the very limited definition of "Accidental" as the insurer defines it. If you have a heart attack or stroke the policy won't pay - they aren't "accidents". If you have a reaction to a spider bite, it's not an "accident". There are far fewer people who die from accidental causes than from natural causes, so the coverage offered in most cases is paid for, and uncollected. A life insurance policy will pay no matter what the cause, so is much more sure to pay.
An AD&D policy is a cheap way to supplement your coverage, and is a good thing if you work in a hazardous job, but please don't use it for primary coverage, okay? Thanks for asking!
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That is sadly not the truth. An AD&D policy will indeed pay if you pass away, but ONLY if your death falls within the very limited definition of "Accidental" as the insurer defines it. If you have a heart attack or stroke the policy won't pay - they aren't "accidents". If you have a reaction to a spider bite, it's not an "accident". There are far fewer people who die from accidental causes than from natural causes, so the coverage offered in most cases is paid for, and uncollected. A life insurance policy will pay no matter what the cause, so is much more sure to pay.
An AD&D policy is a cheap way to supplement your coverage, and is a good thing if you work in a hazardous job, but please don't use it for primary coverage, okay? Thanks for asking!