Is accidental death insurance worth it ?

Accidents can happen in the blink of an eye but the implications can last a lifetime. When deciding whether to get accidental death & dismemberment insurance or not there are some things you first need to understand and consider.

There is no simple universal answer to the question “Is AD&D insurance worth it ?” as it completely depends on your personal situation or needs. You need to carefully evaluate the pros and cons to decide if having AD&D insurance adds value and is worth having.

Pros of having AD&D insurance

  • The cost
  • AD&D insurance is dirt-cheap as it has low premiums, and some companies even offer it for free to their clients. Typical premiums range from $1 to $5 per month.

  • No medical exam required
  • Due to the nature of Accidental death & dismemberment insurance, no medical exam is required, no medical questions need to be answered.

  • Insured in case of dismemberment
  • If you are professionally dependent on the use of your physical abilities like speech, limbs or extremities AD&D coverage can financially ease the stress of an eventual income loss for you and your family. A specified portion of the death benefit (the so-called “scheduled benefit”) will be paid out in case of partial dismemberment (loss of speech, hearing, paralysis of the extremities, loss of movement, …). In case of complete loss of your physical capabilities the entire face value of the death insurance insurance can be paid out.

  • Double indemnity benefits
  • If you already have a term life insurance AD&D this insurance policy can be added on top as a low-cost addition/endorsement/rider and pays out twice the face value of the death benefit to your beneficiaries. This is called “double indemnity”.

Cons of getting AD&D insurance

  • Likelihood of pay-out
  • Accidental death insurance coverage extends only to the unforeseen circumstances unrelated to the body. The reason AD&D is so inexpensive is that the chances of dying in an accident are statistically very small, so a pay-out is unlikely. There are also a lot of conditions that negate benefits. AD&D does not cover death caused by illness or a (pre-existing) medical condition, illegal or criminal activities, suicide, death during surgery, … Death insurance only covers death directly resulting from the injuries of an accident, and this only when death occurs within a set time-frame (a certain number of days) after the accident.

  • Coverage waiting period
  • Some death insurance policies have a waiting period before the coverage starts, like e.g. a time period of 24 months.

  • No replacement for term life insurance
  • Maybe you already have enough coverage through your “regular” life insurance policy. Remember, term life insurance is a more complete insurance package through which you are covered in case of all kinds of deaths, not only accidental deaths. All-in-all, the cost of term life is remarkably higher but its coverage is far more complete. Nonetheless, it can absolutely be considered as an endorsement to a standard term life, as it doubles the face value of the death benefits paid out to your beneficiaries.

As stated before, the decision whether having accidental death and dismemberment insurance is worth it depends entirely on your own personal considerations and situation. AD&D’s very low-cost premiums can be a valid reason to get this kind of coverage, but keep in mind the chances of an accident happening are marginally small.

If you really desire peace of mind you probably should opt for a term life insurance with double indemnity (a death insurance policy on top that pays out a multiple of the face value of the death benefits).