An accidental death and dismemberment insurance policy (AD&D) is not the same as a standard life insurance policy. Yes, it pays a death benefit, but as the name suggests, only provides coverage in the event you die due to an accident. If you are dismembered because of an accident, the policy generally pays out a predetermined amount as specified in your policy.
An AD&D policy also differs from a standard life insurance policy because it's generally offered as a life insurance policy benefit rider or supplemental insurance. So while you can buy an AD&D policy by itself, it is more commonly added to another life insurance product.
As a policy rider, the AD&D benefit pays out an additional death benefit to your beneficiary that is over and above your current death benefit limit as stated on your life insurance policy. For example, if you have a $500,000 policy with a $200,000 AD&D rider and die in a tragic accident, your life insurance policy will pay out $700,000 to your beneficiaries. However, if you die due to any other cause, the payout would be the limit of your life insurance policy, $500,000.
Although AD&D insurance is no replacement for standard life insurance, AD&D can provide valuable supplemental coverage at a relatively low price, especially if it's purchased through a group like your workplace. If you're concerned about accidental death, or you work in a potentially hazardous occupation and can't afford to buy sufficient life insurance coverage, adding this rider might be a good option.
For more information on life insurance and life insurance policy riders, visit Protective's Learning Center.
Note: Not all life insurance policies offer an AD&D insurance rider.