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What is accidental death and dismemberment (AD&D) insurance?
In Canada, accidental death and dismemberment insurance (or AD&D insurance) is a type of insurance policy that pays out a lump sum in the event you pass away or experience significant injury as a result of a covered accident. Common accidents include falls or motor vehicle accidents.
Accidental death insurance (or AD insurance) does not cover severe injuries. It only provides a payout to your beneficiaries if you pass away as a direct result of a covered accident.
If you experience a major injury and you have AD&D insurance, you typically receive a partial payment. This amount can be used to cover lost income, expenses, debts, or other financial obligations for you or your loved ones.
Although they are limited types of insurance, accidental insurance can be valuable tools for peace of mind and financial security, knowing the what-ifs are taken care of.
What’s the difference between life insurance and AD&D?
You may hear accidental death insurance sometimes referred to as accidental life insurance. This can be misleading, since they don’t provide the same type of coverage.
While AD&D insurance and traditional life insurance both provide a payout to your beneficiaries if you pass away, they have quite a few differences between them. Here’s what you should consider when comparing accidental death vs. life insurance:
- Death coverage: AD&D insurance only covers death from fatal accidents, while life insurance covers any cause of death, including illness, natural, or accidental.
- Injury coverage: AD&D policies can provide partial or full payment for major injuries, such as dismemberment, paralysis, loss of sight, hearing, or speech. Life insurance doesn’t provide a payout for injuries.
- Cost: AD&D insurance can be cheaper, but coverage is typically more restrictive. Term life insurance can be an affordable alternative for broader coverage.
Do I need both life insurance and AD&D?
Although life insurance and AD&D insurance share many similarities, they aren’t replacements for one another. They can work together to offer you and your loved ones more extensive coverage. Many Canadians carry life insurance for general protection and add AD&D for extra accident coverage.
If you have separate life insurance and AD&D coverage and you pass away in a covered accident while meeting the conditions of both policies, your beneficiaries will receive the payout from both.
How does accidental death insurance work?
When you purchase a standalone accidental death insurance policy, you commit to making monthly payments, also known as premiums, to keep your policy active.
If you pass away due to a covered accident while your policy is active, your loved ones receive a lump-sum, tax-free payout that can be used to cover any outstanding debts or necessary expenses.
In Canada, accidental death insurance can sometimes be purchased as an additional rider on top of your existing insurance policies, or it can be offered as part of your workplace benefits.
What does accidental death insurance cover?
Accidental death insurance provides a payout to your beneficiaries if you pass away as a direct result of a covered accident. This can include falls, vehicle collisions, drowning, or any incidents not related to illness or natural causes. AD insurance policies only cover fatal accidents, while accidental death and dismemberment (AD&D) policies will also pay out benefits if you are seriously injured from an accident.
What is NOT covered under an accidental death insurance policy?
Illness, suicide, drug or alcohol use, and high-risk activities typically aren’t covered by AD insurance. Unlike traditional life insurance, which covers almost any cause of death, accidental death insurance policies are typically restricted to specific accidents, such as a car crash or homicide.
Conversely, accidental death and dismemberment insurance policies do not provide coverage for serious illnesses that do not result in death. If you’re looking to build a financial safety net to protect against unexpected health diagnoses, critical illness insurance may be a better fit for your needs.
The details of your coverage can vary depending on your insurance provider, so it’s important to carefully review and fully understand the protection you have from your AD or AD&D policy. This also allows you to assess whether you need to secure additional coverage, such as term life insurance or critical illness insurance, to cover all your bases.
Who should get accidental insurance?
While term life insurance is the standard for broader protection, accidental insurance can be a valuable safety net for Canadians who have higher-risk jobs or lifestyles.
You might consider adding AD&D insurance for supplemental coverage if you:
- Work in a high-risk occupation with an increased risk of a workplace accident.
- Have hobbies or a lifestyle that increase your risk of accidental injury or death (e.g. construction workers, skydiving, frequent travel, etc.)
Remember: AD&D insurance benefits are restricted to specific types of accidents. Be sure you understand what your policy covers to ensure you have the level of protection you need.
Is it worth getting accidental death insurance?
There’s no one-size-fits-all answer to insurance, so whether accidental death insurance is worthwhile depends on your unique situation. AD insurance can be helpful for those who need extra accident coverage. But for many Canadians with an average lifestyle, traditional life insurance coverage may provide sufficient protection.
Alternatives to accidental death insurance
Like AD insurance, term life insurance provides financial compensation to your family and loved ones if you pass away. Since it covers almost any cause of death, term life insurance can be a better and more affordable alternative for most Canadians.
With Blue Cross Life, you can get comprehensive term life insurance coverage to suit your specific needs:
- Flexible term lengths from 10 to 30 years
- Coverage from $100,000 to $5 million
- 100% tax-free payout for beneficiaries
- Affordable rates never change throughout your term