Individuals in the workforce are encouraged to get the right insurance to help support financial costs that could arise in different situations. As there is a wide variety of coverage you can choose from, you need to familiarize yourself with the best options.
During your research, you might come across accidental death and dismemberment (AD&D) insurance. This policy covers the unfortunate and unintentional death or dismemberment of the holder.
If you are thinking of getting this coverage instead of the more traditional life insurance, you might want to know more about AD&D and how it compares to life policies. Check out the most important distinctions of the two.
Three main differences between AD&D and Life Insurances
Coverage
When talking about the dissimilarities between the two types of insurance, the key point you should primarily look at is coverage. As mentioned, AD&D is a policy that covers accidental death and dismemberment. Unintentional death and murder fall under this.
However, it is important to mention that AD&D policies includes loss of and loss of use of body parts and/or its functions. Loss of limbs, sight, hearing and speech are covered by this. Take note that the aforementioned are not included in life insurance policies.
While life coverage does not protect holders and their beneficiaries in case of dismemberment, it does cover death by natural causes, accidents, drug overdose, suicide and murder.
When it comes to expiration, both options can expire. However, you can choose to get whole or permanent life coverage, which does not expire.
Costs and payouts
The next thing you need to know is the cost and payouts of the two. Generally, AD&D policies are less costly owing to low historical mortality rate. On the other hand, any type of life policy usually costs more.
One thing you should know about AD&D is that you can add it as a rider to the more traditional option. This can drive up the cost of paying for an accidental death and dismemberment policy, precisely because you are adding it to an umbrella coverage.
On the other hand, life policy can cost more if you have a pre-existing medical condition. You can expect payouts from either option, depending on what they cover. Just remember that AD&D’s coverage is limited only to accidental death and dismemberment.
Eligibility
Getting a life policy requires a full medical evaluation. This aims to determine whether you have pre-existing medical conditions. Moreover, you need to disclose your age and habits such as drinking and smoking.
As for AD&D, you do not have to get a medical exam. This is why this is usually preferred by people with uninsurable medical conditions.
Conclusion
AD&D is an attractive choice for many individuals. With lower costs and less restrictive eligibility requirements, you might find this choice more appealing.
Now that you know the differences between the two, you can weigh your options and needs and choose accordingly.
