Accidental death and dismemberment insurance

Accidental death and dismemberment insurance (AD&D) is an policy that pays benefits to a beneficiary when the policyholder is involved in an accident that results in death or a serious injury.

Serious injuries include the loss, or the loss of use of, a limb, sight, hearing, and/or speech. In the case of death by accident, AD&D insurance pays in addition to regular life insurance.

Group coverage
AD&D is typically part of a company group benefit plan.

Employer paid AD&D premiums are considered a taxable benefit as a result of a change in the 2012 Federal Budget.

Private coverage
AD&D insurance is also offered to individuals, on its own, or in addition to regular life insurance (as a rider).

However, in 2008, accidents were the fifth cause of death. In 2018, transport accidents caused 0.6% of all deaths in Canada, while "other external causes of accidental injury" caused 4.0% of deaths. In other words, in about 95% of deaths, AD&D insurance would not pay.

Further, privately purchased stand-alone AD&D is also quite expensive. In one example, a 30 year old female looking at $250k of coverage would pay $23 a month for AD&D insurance, but could instead pay $20 a month for 20 year term life insurance, or $28 a month for 30 year term insurance.

Therefore, regular life insurance is typically a much better solution, as it covers almost all types of death, for a similar price to AD&D insurance.