Life insurance vs Accidental Death and Dismemberment (AD&D)

There are some important differences between the various types of insurance plans available to customers in the UK. This is one of a series of short articles intended to help you find the one that best fits your needs. We'll cover:

• What is a life insurance policy?
• What is accidental death and dismemberment insurance?
• How do life insurance and AD&D policies differ?
  

What is life insurance?

A life insurance policy is a contract between an individual and an insurance company in which the insurance company agrees to pay a designated beneficiary a sum of money upon the death of the insured individual. The insurance company typically charges the individual a monthly premium for the cover.

Learn more about life insurance here.

What is accidental death and dismemberment insurance?

Accidental death and dismemberment (AD&D) insurance is a type of insurance that pays benefits to the named beneficiary in the event of the policyholder's death or dismemberment due to a serious accident. It doesn't cover death by suicide, illness, or reckless behaviour.

Taking out an AD&D policy doesn't require a medical, and pre-existing medical conditions don't matter.  It can be bought in addition to other life insurance policies, and will pay out regardless of any other life insurance claims being made. The pay out is usually tax-free.

How do they differ?

You know what? They aren't so different. AD&D is basically a more limited form of life insurance, in that only pays out when there has been an accident.