No, AD&D, Accidental Death and Dismemberment Insurance, is not the same as Life Insurance. AD&D only covers death or dismemberment that occurs as the result of an accident, such as car accident or falling off a ladder. Life insurance covers death due to all types of illness and all types of accidents. It even covers death by suicide after the first two years.
AD&D is short for Accidental Deaty and Dismemberment. This means that if you die due to an accident this insurance may pay a death benefit. If you lose a leg, arm, hand, etc. and survive the accident there may be a benefit paid to you. Life insurance differs in that it pays the face amount when the insured dies providing the cause death was not excluded in the insurance policy.
No, AD&D is not the same as Life Insurance. Accidental Death and Dismemberment Insurance only pays if death is cause by an accident, or if a limb is lost due to an accident. It will not pay if a person dies from illness or old age. Even if the accident is cause by illness (e.g. getting in a fatal car accident while having a heart attack), an AD&D policy will generally not pay the death benefit.
Life insurance pays for death cause by illness or by accident. Since most death occurs by natural causes, more death benefits are paid, and the policy has a higher premium than AD&D. But the chance of having a permanent Life Insurance policy pay out is nearly 100%, where the chance of ever collecting on an ADD&D policy is very low.
Great question! And the answer is no! Many people believe that an AD&D policy is a cheap way to insure themselves if they were to pass, but these policies most often do not cover any form of death by illness, and often have strict definitions of what an accident is. For example, you are bitten by a spider, and the bite causes an allergic reaction that kills you. The bite certainly wasn't intentional on your part, but doesn't qualify as an accident in most cases in the eyes of the insurance company. There would be no payout in this case. The life insurance policy would have paid, however, as there are very few exemptions that would disqualify payment. I know that can seem confusing, but if you need more information, please contact me, and I'll help with whatever questions you have. Thanks for asking!
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Keith Prim - Dallas, TX 214-435-0791
Life insurance pays for death cause by illness or by accident. Since most death occurs by natural causes, more death benefits are paid, and the policy has a higher premium than AD&D. But the chance of having a permanent Life Insurance policy pay out is nearly 100%, where the chance of ever collecting on an ADD&D policy is very low.