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It’s one thing to know that you want to protect your loved ones in case the unexpected happens. But it’s another thing to know which type of life insurance product is right for you.

Should you get term or permanent coverage? Or would accidental death and dismemberment (AD&D) protection be a better fit? These are very common questions that people have as they begin shopping for life insurance.

Let’s take a look at some of the key differences of each product to help give you a better idea.

What is the difference between life insurance and AD&D?

In general, life insurance provides a benefit to your loved one in the event of a death from any cause except for suicide within the first 2 years of the policy, whereas AD&D would provide a benefit only in the event of a death or dismemberment due to accidental causes. There are other details about both that you should consider before making a decision, though.

What does life insurance cover?

Life insurance covers death from both accidents and other causes, such as old age, cancer or other illness. There may be some exclusions, which would be explained in your contract.

With life insurance, there are 2 main types to choose from: term and permanent.

As the names imply, term life insurance offers protection for a specified amount of time, while permanent life insurance protects you for your lifetime. 

Many life insurance products require either a medical exam or access to medical records when purchasing coverage. Your health and age will play a role in determining the cost, and you can be denied coverage.

With certain life insurance products, you also have the potential to grow the cash value within your policy.

What does AD&D insurance cover?

AD&D insurance pays a benefit to your loved ones only in the event of death or dismemberment due to a qualifying accident. Each insurance company sets their own qualifications, but some common examples of covered events would be death due to a traffic accident, loss of a limb, loss of hearing or sight, or paralysis.

There is no medical exam required, and as long as you meet the requirements, you’ll generally be approved for coverage. Because there are fewer qualifications for approval, accidental death insurance can be one alternative if you're declined from a life insurance policy for health reasons.

However, there is also no cash value accumulation potential with these types of policies.

Disadvantages of accidental death insurance

Unintentional injuries or accidents were the 3rd leading cause of death in the United States in 20221; however, those figures are significantly lower than the top 2 causes of death, which were both health related. This means there is a much lower chance of someone dying from an accident than by other causes — and a lower chance of a policy payout.2

Also, there are limitations to these policies that are determined by each individual insurance company. These can range from denying coverage for people in high-risk professions to limiting the amount your loved ones receive based on the type and severity of your injuries.

Know your options

Having both types of insurance would provide your loved ones extra coverage and the potential for an increased payout in the case of an accident.

And many life insurance policies, including the ones offered by Nationwide®, have optional accidental death benefit riders that can be added to the policy for an additional cost.

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Determining the right protection for the people who matter most to you is an important decision.
Contact your financial professional or click here today to learn more about your options.

[1] “Unintentional injury in the U.S. - Statistics & Facts,” Statista, statista.com/topics/3991/unintentional-injury-in-the-us/#topicOverview (accessed on June 10, 2024).

[2] “Accidental Death and Dismemberment (AD&D) Insurance,” Julia Kagen, Investopedia (Feb. 29, 2024).