YOU ASK:

AD&D insurance vs. life insurance: what is better?

WE ANSWER:

Both are excellent products, depending on your need. Let us discuss what each of these products has to offer.

Accidental death and disablement insurance is actually not a life insurance product. It is more under the casualty insurance department. This insurance pays an indemnity benefit when the insured dies or becomes disabled because of an accident that is not work-related. It can be bought as a stand-alone product or included in the life insurance coverage. The policy usually has a schedule for a specific loss due to an accident. It pays specified amounts for loss of fingers, sight, limbs, etc.

Meanwhile, life insurance will pay for the death benefit whether the insured dies by natural causes, by sickness or by accident. Life insurance comes in a variety of forms. The usual kinds would be term life, whole life and universal life insurance.

Aside from this, here are some differences between the two:

  • Medical requirements. AD&D insurance usually does not have medical questions (since the payout is based on an accident happening), while standard life insurance is issued with underwriting guidelines that need you to present proof that you are insurable.
  • Premiums. AD&D insurance is cheaper since it only covers against accidents.
  • Benefit payout. With AD&D insurance, the payout depends on the extent of the injury. For instance, if the person loses a limb, the payout will be 25% of the policy amount. For the loss of the sight of both eyes, it will be 100% of the policy amount. For standard life insurance, the death benefit provided will be the full policy amount.
  • People insured. With AD&D insurance, the person buying can opt to include his spouse and children in the coverage and save up on premiums. With life insurance, only the individual can be covered, since each person's situation is unique.
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