What is the Difference Between Term Life Insurance and Accidental Death Insurance?

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Getting life insurance coverage is not as straightforward as many people expect. In fact, there are so many different types of insurance it can be difficult to decide which one will work best for you and for your loved ones. Today, we’re going to be discussing a specific type of life insurance coverage—accidental death and dismemberment insurance (AD&D). Though the name sounds scary, it is important to know what these policies are, who they’re for, and how they work before you make a decision about purchasing your own policy or getting coverage through your job. To give you an idea of how AD&D insurance works, we’ll first talk about term life insurance and then compare and contrast the differences in coverage, process for getting coverage, and who needs each type of insurance. If you are interested in learning more about AD&D insurance, keep reading!


What is Term Life Insurance?

To get started, we’re taking a look at term life insurance policies and how they protect your loved ones.

Before we can start talking about AD&D insurance policies, let’s take a brief moment to detail how term life insurance policies work. Term life insurance is designed to financially protect your loved ones should you die unexpectedly. Most often, the payout from a term life insurance policy is used to help pay off debts or to supplement essential services, like childcare. Your term life insurance policy will only protect you for the selected duration of your term. Most term life insurance policies will last anywhere from 20-40 years. The goal is that when you have reached the end of your term life insurance policy, you will no longer need coverage as you have saved enough money and paid off major debts during the term.

In order to get a term life insurance policy, you will need to fill out a survey, allow the insurance company access to your medical records, and undergo a medical exam. There are options to qualify with no exam, if you don’t feel comfortable getting blood taken or want to secure coverage as quickly as possible. When you apply for life insurance without a medical exam, you can get approved much faster than if you were to wait for your exam results. Sometimes, this type of no medical exam life insurance is referred to as “accelerated underwriting.” No matter which option you choose—taking an exam or getting insurance without an exam—your application will need to go through the underwriting process. The underwriting process will place you in a risk class, and from that assessment the insurance company will present you with an offer.

How does AD&D Insurance Differ from Term Life Insurance?

Unlike term life insurance, AD&D insurance only pays out in a specific set of circumstances

AD&D insurance can cover lost income and medical bills.

Accidental death & dismemberment insurance is a type of life insurance policy that protects your family in the event of an accident. The terms and conditions of these policies tend to be very strict, unlike that of a term life insurance policy. Term life insurance does not have nearly as many restrictions on the circumstances of your death and is sometimes referred to as an “all cause” death benefit.

These specific circumstances that will result in a payout from an AD&D policy include an accident that results in death or another type of serious injuries. These injuries can include anything from the loss of a limb to partial paralysis. Since these types of injuries permanently affect your ability to earn income and come with a whole host of hospital bills, the payout becomes extremely important.

Should you get injured on the job without AD&D insurance, then you may end up bearing the brunt of your medical bills while trying to secure new employment. Since this puts you and your loved ones in a tight financial spot, AD&D insurance is necessary to alleviate the financial burden.

There is also the possibility to add an AD&D rider to your existing life insurance policy. In the case that you already have a term life insurance policy, there are options to add AD&D insurance to your existing policy as a rider. Adding riders to your life insurance policy will increase your monthly premium, but it will also increase your payout should you get into a qualifying accident. It can also help protect you in the case of an injury, which is not included with a term life insurance policy.

What Types of Accidents Does AD&D Insurance Cover?

Before you choose to take out a policy, make sure you know what types of accidents are covered under your policy

Car accidents are usually covered under AD&D insurance.

Unlike term life insurance, there are certain circumstances that will trigger an AD&D payout. While not every policy or rider is exactly the same, there are a lot of different circumstances that policies have in common. Let’s take a look at some of the types of accidents you can expect to be included in your AD&D coverage:

  1. Car Accidents
  2. Accidents on the job
  3. Slips & Falls
  4. Accidents involving firearms
  5. Fire

These types of accidents are usually insured through AD&D. However, there are also several examples of accidents that are not covered with AD&D. If you expect to be insured against the following incidents, you will want to opt for a different type insurance policy instead of an AD&D plan:

  1. Accidents involving drugs or alcohol (including instances of overdose)
  2. Suicide
  3. Natural causes
  4. Some high-risk recreational activities like skydiving, bungee jumping, racing cars
  5. Accidents involving high-risk professions

In the case of a high risk profession, there may be a chance that you are unable to get AD&D coverage at all. As someone who works in a high-risk profession like mining, logging, or commercial fishing, you may present too high of a risk to insure.

What is The Cost Difference Between Term Life and AD&D Insurance?

If you are searching for coverage on a tight budget, AD&D insurance could be the right choice to protect your loved ones

AD&D may be inexpensive but term life insurance provides coverage in far more circumstances.

When it comes to insurance coverage, any amount of coverage is better than nothing at all. If you are searching for an inexpensive way to protect yourself in the event of an accident, then AD&D insurance could be the right option for you. In general, getting AD&D coverage will be cheaper than getting term life insurance. However—as we mentioned—your loved ones will only receive a payout if you meet the specific criteria.

If you are interested in more comprehensive coverage, you should consider a term life insurance policy. In the event of your untimely death, your policy will be able to support your family in a number of circumstances—just make sure to check for any additional clauses. For just a few more dollars per month, you can secure your family’s future without the need for any major caveats. Not to mention, getting life insurance with no medical exam is easy and you can get approved in just a few days!

There is also the option to add an AD&D rider to your existing term life insurance policy. Though adding a rider will increase the cost of your monthly premium, many policyholders prefer having peace of mind that they will be covered in the event of a non-fatal accident.

Only you can correctly determine whether or not your family needs an AD&D insurance policy. For some, this type of insurance policy is ideal while others will be better off with a standard term life insurance policy. Since not all AD&D policies are created equally, we recommend that you shop around at different providers to compare and contrast their AD&D policies. The more research you do, the more assured you will be when you purchase a policy.


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