AD&D insurance.
In plain English
AD&D stands for accidental death and dismemberment insurance. It pays a benefit only if you die in a covered accident, or if an accident causes a specified loss such as losing a hand, foot, sight, or hearing. It pays nothing for death from illness, age, or natural causes, which is what makes it narrow. Dismemberment claims usually pay a percentage of the full benefit based on a schedule, so losing one limb pays less than the full amount. It is often offered cheaply as an add-on through employers.
01Why it matters
AD&D is cheap because it rarely pays out, so it is a poor substitute for real life insurance, and counting on it can leave your family unprotected for the most likely causes of death.
02The math, step by step
Suppose your employer offers $100,000 of AD&D coverage. If you die in a car accident, your beneficiary receives the full $100,000. If you lose sight in one eye in an accident, the policy might pay 50 percent, or $50,000, based on its schedule. But if you die of a heart attack or cancer, the policy pays nothing. The exact percentages for each loss are set by your policy schedule, so check the dismemberment payout percentages in your own plan documents.
03What this is NOT
AD&D is not life insurance. Standard life insurance pays out for almost any cause of death. AD&D only pays for accidents and specific physical losses, which is why most people treat it as a supplement to, not a replacement for, a real life insurance policy.
04Receipts
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