Do I Need Accidental Death Insurance?

A listener asks if accidental death insurance is a good idea. Dave explains why it isn’t since you aren’t “double dead” when you die.

QUESTION: A listener asks if accidental death insurance is a good idea. Dave explains why it isn’t since you aren’t “double dead” when you die.

ANSWER: You need a term life insurance policy, and you do not need accidental death and dismemberment. You’re not more dead if you die by accident. You’re not double dead if you die by accident. Your family needs exactly the same amount whether you die by accident or not.

Accidental death insurance is so cheap because you’re only paying for what you’re getting, which is a very low probability of death. Don’t buy gimmick insurance. Get term life insurance, 15- to 20-year level. Buy it away from your work so if you get cancer or have a heart attack or get diabetes while you’re at that job, when you leave it, you’re not without life insurance.

Buy about 10 times your income on you. That’s the direction to go. If you make $40,000 a year, you need about $400,000 on you. If you die, your beneficiary would get $400,000. They can invest that. If they make 10% on that money over time, then they would make $40,000 a year. We just replaced you. That’s the point of life insurance: to replace the income. Term life insurance is inexpensive.