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Accidental Death & Dismemberment: What’s the Point?

Written by Nickel - 16 Comments

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
Modified on August 15th, 2006 - 16 Comments
Filed under: Insurance

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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16 Responses to “Accidental Death & Dismemberment: What’s the Point?”

  1. 1
    Jeremy Stein Says:

    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! :)

  2. 2
    Charles Says:

    A lot of companies will bundle what is an otherwise more expensive insurance into a very low cost, or in my case free, benefit.

  3. 3
    Corey Says:

    “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.

  4. 4
    Foobarista Says:

    I 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…

  5. 5
    Donna Says:

    Very 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.

  6. 6
    Anon Says:

    AD&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.

  7. 7
    Stickery Says:

    Actually 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…

  8. 8
    MITBeta Says:

    Consider, 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.

  9. 9
    TD Says:

    AD&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.

  10. 10
    LIC Says:

    Too 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.

  11. 11
    nickel Says:

    Yeah, 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.

  12. 12
    Fawad Says:

    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.

  13. 13
    kassie Says:

    is AD&D considered life insurance???

  14. 14
    The Bear Says:

    From selling insurance for many years, I can say that the reason for AD&D is that by losing two of your vital body parts (between your 2 arms, 2 legs, and 2 eyes, you need to lose 2 of those things in order to collect) you will have additional expenses to pay in order to live a normal life. If you live in a two story house and drive a car, losing your legs will hinder your ability to go upstairs and to drive around. You would need to buy a stair lift and a special car with motorcycle handles. Not to mention, you would have to buy a new, easy access shower and you would have to lower your counter top and shelves in your kitchen. And if you have kids, then you will need more childcare. LTD only replaces your income. So if you could not afford these expenses on your current income, then LTD will not help you pay for them.

    Why does it have to be an accident? Because if one loses their eyes, arms, or legs due to a sickness, then they are very likely uninsureable.

    I am not sure about the accidental death. Death by accident is just as costly as death by sickness. Actually, I think death by sickness is more expensive (more medical bills over time, and more time off of work for the survivors). All I can think of is that if somebody had an accident when they lost two limbs and died, then there is no question as to which happened first. If it was death, then loss of limb, then the insurance company may not have to pay. I am not sure about that part, but it is just my take on it.

    As for AD&D, I think the question may be how much coverage is needed. This, like life insurance, should not be a lottery insurance. If you lost your eyes, arms, or legs, your $100,000 should go to paying for expenses you will incur. I always thought that AD&D should be a rider with LTD or health insurance.

  15. 15
    Um Says:

    Wow Bear you sold insurance for many years? I guess it’s typical for someone in sales to know nothing about their product. I came here for answers and found what I normally find in an anonymous Internet message board…rubbish! Foobarista was the only one with a worthwhile comment.

  16. 16
    Greg Says:

    I am a life only agent. 31 years in the business. Is accidental death insurance worth it? Ask 9 clients of mine that either lost a spouse, parent and children due to accidental death. For a few bucks a year you can boost your life insurance $100,000 or more. Now, the bad reviews have always said that it is a waste of money, that unless you die of an accident your premiums are lost and they would be absolutely correct. That’s exactly why my AD plans are 20 year renewable term plans that have a Return of Premium Rider attached. This way if you don’t die and you survive the 20 year term, you may renew the policy which has now doubled in death benefits or you can Opt Out and receive 100% of all Annual premiums you paid in over the past 20 years. It’s a Win – Win policy. Now, you see why I provide this great policy to literally hundreds of my clients. I average 10 – 15 new apps each week. A very affordable guaranteed renewable plan for ages 18 – 60. A very wise decision for the client.

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