Life Insurance vs AD&D: Do You Need Both?

iQuanti: Life insurance and accidental death and disability insurance (AD&D) have a lot of similar components. In essence, life insurance pays out a death benefit in the event that the insured person dies. AD&D pays out if the insured person dies or suffers a severe injury from an accident. 

Many individuals can find a life insurance policy that satisfies their basic coverage needs, but AD&D plans can be great for those who need supplemental insurance, as AD&D insurance is typically more cost-effective than life insurance and can offer different coverage. 

When Life Insurance Pays a Death Benefit vs AD&D

Life insurance pays a death benefit in the event of almost any type of death, whereas AD&D insurance will only cover a death that happened as the result of an accident. 

On the other hand, life insurance does not provide coverage for severe injury like AD&D insurance does. Each AD&D plan will outline the exact circumstances it provides coverage for but, generally speaking, the circumstances would be related to some sort of accident.

How Much Life Insurance Costs vs AD&D

Life insurance is generally more expensive than accidental death and disability insurance, and life insurance premiums tend to increase with age.

Some people may decide to purchase a more cost-effective AD&D policy while they are young and working, but then life insurance will likely become significantly more expensive if they decide to purchase it later in life rather than locking in a low rate while young and healthy. 

Buying Supplemental Life Insurance

Many people have life insurance or AD&D insurance through employment and, while this offers a base level of coverage, it is often not enough, and the insurance doesn't stay with individuals after they leave their employer. Therefore, many people consider their own additional life insurance.

Supplemental life insurance is simply additional coverage. It may come in the form of another separate life insurance policy and/or AD&D policy. Those who purchase supplemental life insurance have the freedom to purchase whatever plan(s) best suit their needs and to keep the plan(s) active for as long as they like. 

AD&D insurance can be a popular option for supplemental life insurance because it expands the types of coverage available without costing as much as taking out another policy. 

Alternatively, riders can be purchased and added to many existing policies, and they may offer similar coverage as AD&D insurance, but every plan is different. Be sure to explore all of your options with a financial planner when considering plans so that you can get the right coverage you need. 

The Bottom Line

The need for both life insurance and AD&D ultimately depends on how much coverage you need and how much your current plan(s) offer. Some individuals may find that their life insurance coverage is sufficient, and others who need supplemental coverage may find AD&D to be a good option for providing additional coverage.