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Should You Buy Accidental Death Insurance?

October 1, 2009

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Wouldn’t you agree that it seems like everyone is offering some sort of Accidental Death insurance these days?

Examples of coverage from
an Unum AD&D policy
Unum offers $250,000 in coverage for $10 a month. It defines “accidental death” as “the loss of life caused solely by external, violent, and accidental means and not contributed to by any other cause.”
Covered loss
policy amount
Full amount
Both hands
or both feet
or sight of both eyes
Full amount
One hand and one foot
Full amount
One hand and sight of one eye
Full amount
One foot and sight of one eye
Full amount
Speech and hearing
Full amount
Full amount
of the full amount
of the full amount
One hand or one foot
of the full amount
Sight of one eye
of the full amount
Speech or hearing
of the full amount
of the full amount
Thumb and index finger of same hand
of the full amount
of the full amount
Source: Unum

From mortgage companies to credit card issuers to banks and employers – everyone is in on these types of plans.

There can be a lot of confusion, however, around Accidental Death & Dismemberment insurance, also known as AD&D.

But just because costs are low doesn’t mean you should be so quick to sign up!

Understanding exactly what an AD&D policy is and what it covers will help you determine if you should buy into one of these plans. 

What Is AD&D?

AD&D is NOT standard life insurance!

An Accidental Death & Dismemberment policy is exactly what it sounds like. 

It’s an insurance plan that gives money to the beneficiary of someone whose cause of death is a non-work-related accident.

It also provides fractional benefits for a loss of limbs, fingers, eyesight etc. The parts of the body and benefits for each vary with each policy.

Generally speaking, the premiums on these policies are pretty inexpensive relative to the benefit that would be paid out. 

When Does It Pay Benefits?

Generally speaking, the policy will pay full benefits in the event of an accidental death and will pay a portion of benefits for the loss of a body part.  See Unum’s example:

As you can see, Unum defines “accidental death” as “the loss of life caused soley by external, violent, and accidental means and not contributed to by any other cause.

What to Watch Out For

Let’s say you have a $250,000 AD&D policy.  Will your insurance carrier pay your spouse if you’re on your way to work and suddenly have a heart attack, head into oncoming traffic and die in an accident?

The answer is no.  Although the death was accidental, the cause was the heart attack, which is a natural cause. 

Now, let’s say your spouse was hit head on in an accident, sustained injuries and passed away four months later due to head trauma from the accident – will you receive benefits?

The answer is: very unlikely.  Most policies have provisions that state you must die within a certain period of time and that it must be directly caused by the accident etc.  Four months is many times too long of a time period.

Who Should Buy These Policies?

Even though the costs are low, the odds of one of these policies paying out is extremely low.  According to, in 2005 117,809 people died from unintentional injuries. 

Now, if your employer offers AD&D as an additional benefit without cost on their group plans then by all means sign up for it – you’ve got nothing to lose at that point.

If you travel a lot for your job or you have a long commute to and from work every day then you may want to consider getting the most you can from an AD&D policy.  The odds of an accident are higher for you.

In general, however, most people do not need the added expense of an AD&D policy. 

If you are looking for additional coverage and think this is a cheaper way to insure yourself, you’d be better off spending a few extra bucks and applying for an inexpensive individual term policy.

8 Comments leave one →
  1. Ethan permalink
    October 1, 2009 3:29 pm

    One of the reasons these plans exist is for people who are not insurable health-wise. They can’t get an affordable term life policy, but this allows them to at least cover non-health-related deaths. Let’s say I’ve had cancer twice in the past, and barely beat it both times. I am very unlikely to be able to get a term life policy. But I’m not more likely to hit by a bus than the next guy, so I can probably still get an AD&D policy. If I have dependents to provide for, this is much better than nothing.

    • October 9, 2009 10:25 pm

      Ethan, that’s a good point. It makes total sense in a situation like that to maintain or acquire an AD&D policy if you can’t get regular life insurance.

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