What Is AD&D Insurance and What Does It Cover?

Life can be unpredictable, so it's always smart to be ready for anything, especially situations that might affect you and your family's finances. If you’re ever seriously injured (or worse) in an accident, Accidental Death and Dismemberment (AD&D) insurance is a type of coverage that could help give financial protection to your loved ones.

One common myth is that AD&D insurance and life insurance are the same, but they’re actually quite different. Understanding the difference can help you decide if adding AD&D coverage makes sense for your situation. With affordable premiums and specific benefits, AD&D insurance can provide an extra layer of protection and peace of mind for you and your family.

What is AD&D insurance?

AD&D insurance is a type of supplemental coverage that pays out when specific accidents happen. If you have AD&D coverage and get injured in a covered accident, the policy pays benefits directly to you. This money can help with medical bills, living expenses and more while you recover. If you die in an accident, the money goes to your beneficiaries—the people you’ve chosen to receive the insurance benefits.

The amount paid depends on what happened to you and what your policy covers. For example, if you lose a body part (such as a limb), you might receive a percentage of your policy’s face value. If you die in an accident, your beneficiaries typically receive the full amount.

Many people find AD&D insurance appealing because it’s typically affordable and doesn’t require a medical exam. You can often get coverage through your employer, as an add-on to your life insurance or through your bank or credit union.

How does AD&D insurance work?

AD&D insurance is fairly straightforward. You pay a premium (usually monthly), and in return, you get financial protection in the event of an accident.

If something happens, the payout works on a schedule. This means different injuries receive different percentages of your total coverage amount. Here are a few examples of potential payouts based on accident type:

• Death due to an accident: 100% of the policy amount.
• Loss of two limbs: 100% of the policy amount.
• Loss of one limb: 50% of the policy amount.
• Loss of sight in one eye: 50% of the policy amount.

The exact percentages vary by policy, so it’s important to read your specific terms.

AD&D insurance coverage requirements and filing

AD&D coverage requirements vary by policy, but typically follow general guidelines. There are usually no health questions or medical exams required. In addition, most policies have age requirements, usually between 18 and 69 years old. Premiums are often low compared with other insurance types, but the coverage amount may be lower than what a standard life insurance policy would pay out.

To file a claim, either you or your beneficiary contacts the insurance company, completes their paperwork and provides proof of the accident. The company then reviews the claim and issues the payment if approved.

What’s the difference between AD&D insurance and life insurance?

While AD&D insurance and life insurance both provide financial benefits when someone dies, their policies play out in different ways. 

Upon death from most causes, including illness, natural causes and accidents, life insurance provides coverage. AD&D insurance provides coverage only if death or serious injury results from an accident.

AD&D vs. life insurance

Here’s how AD&D and life insurance compare in different situations involving accidents:

• If you only have life insurance and lose a limb in a car accident, your policy wouldn’t pay anything because life insurance doesn’t pay out for injuries. But with AD&D coverage, you’d receive a benefit to help with your expenses while you recover.
• If you die in a car accident and only have life insurance, your beneficiaries receive your policy amount. The same is true if you only have AD&D insurance. But if you have both types of coverage, your loved ones will receive payments from both policies, giving them more financial support.

Life insurance generally costs more than AD&D coverage, but it provides broader protection. Many financial experts recommend buying life insurance to serve as your foundation and considering AD&D to supplement (not replace) that protection.

How do I know if I need AD&D insurance?

Determining if AD&D insurance makes sense for you depends largely on your circumstances. Certain situations can make an AD&D policy particularly beneficial for some people. 

Here are a few questions to help you decide if it’s right for you:

• If you were unable to work due to injuries from an accident, would you and/or your family need financial support?
• Have you reviewed your current coverage and found gaps in protection?
• Do you have enough emergency savings to cover expenses if you couldn’t work after an accident?
• Are you looking for additional insurance coverage that typically doesn’t require medical screening?

If you already have good life insurance coverage, you might not need AD&D insurance. However, because it’s often affordable, some people add AD&D for extra peace of mind.

What does AD&D insurance typically cover?

AD&D insurance often covers a range of accidental injuries and death scenarios. While policies can vary, most AD&D plans cover:

• accidental death from car crashes, falls, drowning or other unexpected accidents
• loss of limbs such as hands, feet, arms or legs
• loss of sight in one or both eyes
• loss of hearing or speech
• paralysis, either partial or complete
• burns, depending on severity and coverage
• coma resulting from an accident

Some policies also include additional benefits such as:

• travel accident coverage for injuries that happen while using public transportation
• education benefits for your children if you die in an accident
• childcare benefits to help cover costs if you’re injured
• rehabilitation benefits to help with recovery costs

The exact coverage and benefit amounts depend on your specific policy. Most insurers provide a schedule of benefits that explains what percentage of the full amount is paid for each type of injury.

What isn’t covered by AD&D insurance?

AD&D insurance can provide valuable protection, but some policies may not cover everything. Some may have any of the following exclusions:

• Death or injuries from natural causes or illness.
• Self-inflicted injuries or suicide.
• Injuries or death while under the influence of drugs or alcohol.
• Injuries from risky activities like skydiving or racing (unless specifically covered).
• Injuries or death resulting from war or military service.
• Death or injuries while committing a crime.
• Pre-existing medical conditions.
• Mental health issues.

Before taking out a policy, make sure you understand the specific exclusions that apply to your coverage. What’s excluded in one policy might be covered in another, so take time to compare your options.

What can AD&D payments be used for?

If you receive benefits from your AD&D policy, you can use the money for many scenarios. Common uses include:

• Medical expenses not covered by health insurance.
• Rehabilitation costs and therapy.
• Home modifications if you’ve acquired a disability.
• Replacement of lost income while you recover.
• Everyday living expenses and bills.
• Mortgage or rent payments.
• Debt repayments.
• Childcare expenses.
• Funeral and burial costs, for your beneficiaries to use.

The flexibility of these benefits is one of the advantages of AD&D insurance. There are no restrictions on how the money can be spent. This allows you or your loved ones to address whatever financial needs are most pressing after an accident.

What else should Servicemembers consider?

Some commercial AD&D policies have military service exclusions. That means they won’t pay benefits for accidents that occur during military service or in combat zones. However, some options, like Navy Federal’s TruStage offering, offer protection for these military service events. This is why it’s important to understand the details of insurance options before taking out a policy. 

If you’re an Active Duty Servicemember, you have unique insurance options through the military designed to protect you on and off duty:

• Servicemembers’ Group Life Insurance (SGLI) provides low-cost life insurance coverage for Active Duty Servicemembers.
• Traumatic Injury Protection (TSGLI) is included with SGLI. It provides short-term financial help if you suffer a traumatic injury.
• Family Servicemembers’ Group Life Insurance (FSGLI) offers coverage for spouses and dependent children of Active Duty Servicemembers.

Coverage usually ends when you leave the service, unless you convert to Veterans’ Group Life Insurance (VGLI).

Navy Federal is here to help, from deployment to retirement

At Navy Federal, we’re committed to supporting our members throughout their lives. We understand that preparing for unexpected events is an important part of financial wellness. We offer resources to help you learn more about insurance, including life insurance options and no-cost AD&D coverage available to members. 

You can also check out insurance and GAP coverage to find more ways to set up a financial safety net for yourself and your family. By taking steps now, you’ll be better prepared to face life’s unexpected challenges.