According to the Centers for Disease Control and Prevention, just 5.4% of the deaths in the U.S. in 2015 were accidental. So, for most people, AD&D coverage isn’t enough. But for some people, it might be wise to use it as supplemental coverage to a term life insurance policy.

Here’s a breakdown of each coverage type and which you might consider choosing.

Term Life Insurance

A term life insurance policy offers broad coverage that pays out when you die with very few exceptions. For example, your loved ones may not receive a payout if you commit suicide within one or two years. Or, if you’re a commercial airline pilot, your policy may include an exclusion that doesn’t cover you if you die while flying.

Term lengths typically range from five to 30 years. If you die when the policy is in force, you’re covered. But if you outlive your policy, you get nothing in return. You can, of course, renew your policy when it ends but you’ll pay a higher premium because you’re older, and potentially also due to medical issues you may have developed in the meantime.

Term life insurance is relatively cheap, especially if you’re young and healthy. For example, a healthy 25-year-old female could pay as low as $12 per month for a 20-year policy with a $250,000 death benefit. Check your rate right now.

Accidental Death and Dismemberment Insurance

You can purchase AD&D coverage as a supplement to your life insurance policy or separately. It only pays out, however, if you die or receive specific injuries in an accident. Depending on your injury, though, you may not get the full payout.

Here’s an example of the coverage you might receive based on a $20,000 policy from Sun Life Financial:

Coverage

Payout Rate

Your Potential Benefit

Accidental death

100%

$20,000

Speech and hearing loss

100%

$20,000

Quadriplegia

100%

$20,000

Paraplegia

75%

$15,000

Loss of sight in one eye

50%

$10,000

Speech only

50%

$10,000

Hearing only

50%

$10,000

Loss of limb (arm or leg)

50%

$10,000

Thumb and index finger

25%

$5,000

In addition to excluding all non-accidental deaths, an AD&D policy might not pay out if your death doesn’t occur shortly after the accident — usually within a few months.

Also, some policies may also have exclusions for accidents that happen due to:

  • High-risk activities like skydiving or car racing
  • A drug overdose
  • Drunken driving (if you’re the impaired driver)
  • Acts of war
  • Complications from surgery
  • Mental illness
  • Suicide

Because AD&D coverage isn’t as robust as what you’d receive with a term life insurance policy, it’s typically cheaper. For example, a healthy 25-year-old woman could get a policy with $250,000 of coverage for $6.45 a month from Mutual of Omaha.

Which Should You Get?

Earlier, we mentioned that accidental deaths made up only 5.4% of all deaths in the U.S. in 2015. But if you look at certain age groups, the percentage is much higher.

For example, for people ages 25 to 34, 38.4% of deaths were a result of an accident. For people ages 15 to 24, the percentage was 41%.  

So, if you’re young, you might want to consider starting with Accidental Death coverage, or adding an accidental death rider to a term life insurance policy.But it’s also important to consider that the majority of deaths in those age groups are non-accidental.

Also, if you develop a health condition or terminal illness, having AD&D coverage alone won’t do you any good, and it’ll be too late by then to get a cheap term life insurance policy. As a result, it may be wise to consider an AD&D policy as a supplement to term life insurance rather than a standalone policy.  

To get started on creating your life insurance strategy, get a free consultation with one of our licensed life insurance coaches. They can help you learn more about the details of each of these policies and give you a quote to fit your budget.