While it is a grim prospect, it is important to have insurance coverage to protect you and your loved ones if an accident causes a life-changing injury or death. Hospital bills, loss of income, and funeral expenses can be a giant burden to bear otherwise. That’s why so many people purchase life insurance and/or accidental death and dismemberment (AD&D) insurance policies.
But wait, what’s the difference between a life insurance policy and AD&D insurance? Aren’t they essentially the same thing? Let’s take a look and see the differences between term life insurance and accidental death insurance along with the benefits of having both policies.
What is Covered By Life Insurance?
Basic life insurance pays out a death benefit to beneficiaries in the event of the policyholder’s death. The cause of death does not matter as long as the policyholder’s passing occurs within the time frame listed in the insurance policy, except in the cases of suicide. The terms of a life insurance policies can last for a handful of years or a lifetime. There are also other varying death benefits depending on your policy. While there are a wide range of plans, the three most typical types of life insurance are:
Term Insurance: A term insurance policy is a life insurance policy that covers anywhere from one to thirty years. At the end of the term, the premium increases due to the insured being older and could be even higher if you develop certain medical conditions such as high blood pressure, diabetes, etc. If the insured dies during the term, the beneficiaries will receive the death benefit regardless of the cause of death, except in the case of suicide. This type of plan is very customizable and has a wide range of price depending on the length of the term, your initial health, the size of the death benefit, and other factors.
Whole Life Insurance: This type of life insurance policy is considered “permanent insurance” since the policyholder has no intention of allowing the insurance policy to lapse. Premiums for this policy are usually broken down into monthly or annual payments based on the policyholder’s entire life expectancy. One of the bonuses of whole life insurance is that the premium price is set when the policy is issued and it will never increase during the life of the insurance policy.
Universal Life Insurance: This type of life insurance operates like whole life insurance and term insurance, but with a twist. Like a term policy it has a set time frame of coverage, however it has annuity attached, basically acting like a cash account. This policy can be set up to last throughout the lifetime of the insured, using a combination of the premium and the cash account to keep it enforced.
What Does Accidental Death and Dismemberment Insurance Cover?
This type of accident insurance is typically a rider that is attached to life insurance coverage, but it can also be purchased as a standalone policy. AD&D insurance provides compensation and coverage in the event that an accident causes the death of the insured or severe injury. While death and extreme injuries can result in a maximum payout, there are some injuries that result in only a partial payment.
Aside from accidental death, AD&D insurance provides partial or full coverage for hearing loss, speech loss, loss of sight, loss of limbs, loss of fingers, and paralysis. The benefits can be used to pay for medical bills or loss of income as a result of those injuries, if they were acquired from the accident.
AD&D insurance doesn’t cover all incidences though. Most plans won’t cover severe injury or death as a result of:
- Suicide attempts
- Drug overdose
- Drunk driving
- Mental illness
- Complications from surgery
Which Policy Should You Consider?
It truly depends on the needs of the individual. Some people may believe that they cannot afford a typical life insurance policy, but obtain an AD&D plan in case a freak accident happens. Others just stick with a life insurance policies since it provides coverage regardless of the cause of death. People that have a higher chance of being in a crippling accident, such as construction workers, would benefit from having an AD&D plan to help them if they survive an accident yet lose a limb. You should discuss your situation with an insurance agent to see which plan fits best for you, however the most protection you can have is through acquiring both a life insurance plan and an AD&D policy together.
Why Should You Get Both?
While there may be some circumstances that could prevent you from getting both policies, such as having a disqualifying pre-existing condition, it is recommended to have both a life insurance plan and an AD&D policy in order to get the most coverage and largest potential benefit. Life insurance can help provide a solid financial safety net for your family should you pass on and many AD&D insurance plans can be tacked on for additional payouts if you pass away in an accident. AD&D is also a safety net in case you survive a severe accident and need financial assistance. In some cases, your employer may be able to provide an AD&D plan for free. Overall, being insured under both types of policies is your best option if available to you.
Now that you know the differences between life insurance and AD&D coverage, you may want to invest in obtaining both plans. Protect yourself and your family by calling Freeway Insurance or get a free life insurance quote or AD&D insurance quote online. Our licensed agents can help you find the best plans at the best price.