Accidental Death & Dismemberment: What’s the Point?
I’ve spent the last couple of days poring over my benefits options for my new job. Choose a health plan, decide on dental coverage, pick a retirement plan, opt for optional group life coverage, etc. That’s all well and good, but I couldn’t help but shake my head when I looked at the brochure for the optional Accidental Death and Dismemberment policy. I just don’t get it (even though I ended up opting for it).
I have life insurance to protect my family if I die, and I have long-term disability (LTD) insurance in case I suffer a debilitating injury or illness. So why do I need to add extra insurance for a special kind of death? You wouldn’t buy death-by-heart-attack insurance, would you? Or death by choking on a meatball insurance? Although that would arguably fall under ‘accidental’ — but I digress. And why do I need to insure my limbs? Sure, it would suck if I lost a limb (or an eye, which is also covered in most cases). But insure it? What’s the point?
If I have a debilitating injury, I’ll be covered by my LTD policy (plus worker’s comp if it happens on the job). While there might be circumstances under which these policies make sense (e.g., high-risk jobs or hobbies), I just can’t figure out why this sort of coverage is necessary. Sure, high-risk jobs or dangerous hobbies might be a good justification, but these sorts of things often make you ineligible for AD&D coverage.
Despite all this, I have to admit that I still went for it… I’m not sure why, but at just $2.80/month for $100k in coverage for myself and my family, I figured it really couldn’t hurt.
Published on August 17th, 2006 - 13 Comments
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I suppose it’s to cover the pain and suffering. You buy uninsured/underinsured motorist coverage so that your pain and suffering will be covered even if the guy who hits you can’t afford to pay up. While it’s great that disability insurance will pay your bills, you’ve also lost some of the ability to enjoy the rest of life. Money can’t replace your legs, but at least you could get titanium wheels for your wheelchair!
Comment by Jeremy Stein — Aug 17th 2006 @ 10:58 amA lot of companies will bundle what is an otherwise more expensive insurance into a very low cost, or in my case free, benefit.
Comment by Charles — Aug 17th 2006 @ 10:09 pm“Money can’t replace your legs…”
Actually, it can to a limited degree and in the future, it’ll likely be able to improve the legs you have now. Take a look at the following links to see what I mean. The first is a news story, and the second is a cybernetics company.
http://www.temple.edu/ispr/exa.....08_11.html
http://www.cyberkineticsinc.com/
By the way, this is a rather interesting blog you’ve got here.
Comment by Corey — Aug 19th 2006 @ 7:22 pmI always called it “Advanced Dungeons and Dragons” insurance. Sort of appropriate in a way - if you’re an AD&D character, you’d want AD&D insurance to deal with those hordes of orcs and other assorted nasties…
Comment by Foobarista — Aug 20th 2006 @ 3:38 amVery Seinfeld like observation. Gave me a bit of a chuckle, but then, I started to add it up and, I can’t see how else you could get an extra $100,000 of coverage for $36.00 per year. So, it sounds like a great deal — but, the insurance companies must know something we don’t (or maybe it’s volume sales) because they are offering this, and, in my experience, insurance companies do not offer products that cost them money.
Comment by Donna — Aug 21st 2006 @ 9:58 amAD&D is for younger people whose most likely cause of death would be some kind of accident. It is substantially cheaper than regular life insurance, and therefore may be an attractive alternative.
Comment by Anon — Aug 21st 2006 @ 3:35 pmActually I always considered it lotto insurance. It is a long shot gamble, for someone (not you) to make money without much outlay. Likewise it it a money maker for insurance company because the odds are long.
If you have financial responsibilities after you kick off - buy the term life you need. Play the lotto if you like, but don’t rely on it.
stickery
ps. hell I have it too… god knows why…
Comment by Stickery — Aug 24th 2006 @ 10:24 pmConsider, also, that the vast majority of people do not have individual disability insurance. Many times more people have life insurance than disability insurance even though you’re way more likely to be disabled than to die (when young…). So AD&D is often offered as a benefit to employees as a way to get the coverage that they don’t realize they need, often at a very affordable price. I would chalk this offer up as a public service but would also suggest that you don’t need to waste your money here since you have already covered yourself in this regard.
Comment by MITBeta — Jul 24th 2007 @ 10:36 amAD&D sounds like a money maker for insurance companies..collect $36 a year from 1 million people and you got one hell of a profit. Why..They rarely payout. If you die on the operating table you did not die due to an accident…
This is same issue with TERM.. Most people live beyond a term insurance policy. That is why it is so cheap. Sell volumes, less than 10% ever payout because you live beyond the term. The insurance company is betting that you will live. They would not offer it, if it would not make them money. Why take the risk of an AD&D policy being challenged, pay for the life insurance and keep your $36 a year and spend it on yourself.
Comment by TD — Oct 26th 2007 @ 10:03 amToo bad you went for it, nickel. You were right asking yourself “Why do I need to add extra insurance for a special kind of death?” The answer is, you don’t. Accidental death insurance makes no sense. This insurance is designed to provide for your family should you be killed in a mishap, such as a car crash or fall. My family doesn’t need more money just because I happen to die in an accident. In fact, your family’s costs would likely be higher if you were to die from cancer or some other disease, which is a much more common cause of death than accidents.
Comment by LIC — Jan 17th 2008 @ 5:58 amYeah, I guess the only real reason that I opted for it was for the dismemberment option, which is admittedly pretty unlikely. And I haven’t cancelled it because, after looking at my LTD policy, it’s not actually that good. What I need is a solid, private LTD policy to supplement what I get from work.
It’s very simple: Life insurance amount is payable in the case of your death to your benefeciaries while AD&D is a one time payment payable in case of any accident.
Comment by Fawad — Jun 10th 2008 @ 2:54 pmis AD&D considered life insurance???
Comment by kassie — May 21st 2009 @ 8:23 pm