President | Founder, CLM Insurance Group, Delray Beach, FL
Life insurance will pay out lump sum to the beneficiary at the time of death regardless of the cause of death (with a few exceptions). An Accidental Death and Dismemberment (AD&D) policy will only pay out to the beneficiary if the death is caused from an accident. Dismemberment typically pays out a lower percentage of the death benefit. AD&D plans are very inexpensive and a great way to add additional coverage.
Great question! There are a couple of major differences. Perhaps most importantly is what they will pay out for. An AD&D policy will only pay if you pass due to an accidental death as defined by their definition of "accident". A sickness, or other health issue (heart attack, stroke) will not be considered an accident, so there would not be a payout for a claim . A Life Insurance policy would pay out for both causes of death, accidental or health related. A benefit of the AD&D policies is that if you are disabled as a result of an accident you can file a claim and be compensated for the injury, something a Life insurance policy won't. Many Life insurance policies include an accident rider that increases the death benefit if the death is by a covered accident, and nearly all will offer it as a rider. I would not advise that someone purchase an AD&D policy as their sole form of protection, as the vast majority of deaths are health related, but they can add some nice extra protection. If you have any questions, please feel free to contact me, I'd be glad to help. Thanks for asking!
Life insurance pays the proceeds upon loss of LIFE. The cause of death is irrelevant, except for a few conditions such as suicide during the first two years.
AD&D insurance pays the proceeds for ACCIDENTAL DEATH &/or DISMEMBERMENT.
Most death is caused by natural causes, which means that Life insurance policies pay out far more often then do AD&D policies.
Co-Founder, TermInsuranceBrokers.com, Goldenzweig Financial Group, Las Vegas, Nevada
Every life insurance policy covers accidental death. Traditional life insurance policies provide full coverage (paying out proceeds in the event death occurs by illness or injury).
Partial coverage policies only covering accidental deaths are known as Accidental Death & Dismemberment life insurance programs. These policies typically feature much lower premiums than full coverage programs, but only pay out a death benefit if death occurs under certain conditions (e.g. dying in a car accident). If you only have an AD&D policy and you die due to a heart attack, the policy would not pay out any proceeds because that would be considered death due to illness.
Even though the premiums are less with AD&D policies, it's worth paying the premiums for a full coverage life insurance policy because individuals are most likely to die due to illness than they will by injury.
The basic U.S. life insurance covers death by any cause at any time in any place (after a 1 or 2 year suicide exclusion period depending upon your state) whereas, an accidental death policy covers only one peril, death by a defined accident. Many insurance critics decry the use of the accidental death policy but accidents are the #5 leading cause of death in America and the #1 leading cause of death for folks 25 and under, so there is a viable need in the marketplace for this kind of policy.
Life insurance pays from all causes of death, including suicide (after 2 years in Canada)..
The accidental death pays if the death results from an accident. With AD&D policies this can actual increase depending on the type of accidental death. It is usually quite inexpensive, but since it can not be counted on in every circumstance should not be counted on totally in any planning.
The dismemberment portion as the name suggests pay for loss or loss of use of parts. For example loss of a limb due to an accident or loss of sight. The AD&D policy or rider will provide a schedule of what portion of the face amount will be paid for each occurrence. In Canada AD&D riders are often are seen with Disability and Automobile Insurance policies
If you have further questions, or feel that I could be of assistance, please do not hesitate to contact me.
If you would like to work with a local life insurance broker, you could start with a Google search. For example, if you search for: life insurance broker Halifax or life insurance agent Halifax, my name, along with several others, will come up. You can use the same method to find a life insurance broker in your community.
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AD&D insurance pays the proceeds for ACCIDENTAL DEATH &/or DISMEMBERMENT.
Most death is caused by natural causes, which means that Life insurance policies pay out far more often then do AD&D policies.
Partial coverage policies only covering accidental deaths are known as Accidental Death & Dismemberment life insurance programs. These policies typically feature much lower premiums than full coverage programs, but only pay out a death benefit if death occurs under certain conditions (e.g. dying in a car accident). If you only have an AD&D policy and you die due to a heart attack, the policy would not pay out any proceeds because that would be considered death due to illness.
Even though the premiums are less with AD&D policies, it's worth paying the premiums for a full coverage life insurance policy because individuals are most likely to die due to illness than they will by injury.
The accidental death pays if the death results from an accident. With AD&D policies this can actual increase depending on the type of accidental death. It is usually quite inexpensive, but since it can not be counted on in every circumstance should not be counted on totally in any planning.
The dismemberment portion as the name suggests pay for loss or loss of use of parts. For example loss of a limb due to an accident or loss of sight. The AD&D policy or rider will provide a schedule of what portion of the face amount will be paid for each occurrence. In Canada AD&D riders are often are seen with Disability and Automobile Insurance policies
If you have further questions, or feel that I could be of assistance, please do not hesitate to contact me.
If you would like to work with a local life insurance broker, you could start with a Google search. For example, if you search for: life insurance broker Halifax or life insurance agent Halifax, my name, along with several others, will come up. You can use the same method to find a life insurance broker in your community.