Do I Need Accidental Death Insurance?

by | Mar. 15, 2010


Dear Dave,

My wife and I have accidental death and dismemberment insurance through our workplace. Do we also need level term life insurance policies?


Dear Anonymous,

You definitely need good level term life insurance policies. You do not need accidental death and dismemberment. Think about it, dude. You're not more dead if you die by accident. Dead is dead! You need to make sure your family is taken care of in the best way possible, no matter how you die.

Don't buy gimmick insurance. Stick with 15- to 20-year level term life insurance, and make sure you have coverage that's separate from anything provided by your employer. You don't want to suddenly lose your life insurance if you're diagnosed with something awful like cancer and have to leave your place of work--and your life insurance--behind.

Each one of you needs about 10 times your yearly incomes wrapped up in your policies. That means if you make $40,000 a year, you need a $400,000 level term policy. The idea of life insurance is to take the place of income. If you died, then your wife could invest the $400,000, make 10 percent on that money over time, and replace your income.

Make sure you take care of your family. Term life insurance is very inexpensive. For next to nothing, you can ensure that your family will get a million bucks when you die.


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