Accidental Death and Dismemberment Insurance May Benefit Banks and Insurance Companies More than Policyholders

Some bank customers report they were charged for accidental death and dismemberment insurance policies that they were led to believe would cost them nothing.

Accidental death and dismemberment insurance is a limited form of life insurance that covers a small subset of accidents. Accidental death incidents covered under these plans may include traffic accidents, exposure, homicide, falls, heavy equipment accidents, and drowning. Dismemberment incidents may include paralysis, blindness, or the loss of limbs, fingers, and toes.

In arrangements similar to those surrounding force-placed insurance, banks may partner with insurance providers to offer bank customers a small amount of accidental death and dismemberment coverage for free. If the customer accepts the free policy, they can then choose to upgrade their coverage to a higher amount at the cost of a monthly charge.

Although these offers may seem convenient, the coverage may be superfluous. Accidental deaths simply don’t happen as often as they used to.

According to the Centers for Disease Control and Prevention (CDC), there are 169,936 unintentional injury deaths each year – equaling around 52 deaths for every 100,000. Although these risks are not negligible, the risk of accidental death is still fairly low.

In many cases, buying a regular life insurance policy will provide the same amount of coverage.

“Consumers are generally much better off buying a conventional term-life policy and basic health and disability insurance than one of these policies,” said Amy Bach, executive director of the advocacy group United Policyholders, speaking to the Los Angeles Times.

Surprise Charges for Accidental Death and Dismemberment Insurance

Unfortunately, some consumers may find themselves being charged for accidental death and dismemberment insurance that they never agreed to pay for. As with auto-renewal subscriptions, consumers may not realize they’re being repeatedly hit with automatic payments month after month.

Sally H. told the Los Angeles Times about how she discovered her policy had been upgraded without her consent. Sally says she spotted a $8.10 payment on her account statement that was for accidental death and dismemberment coverage.

As she dug deeper, Sally reportedly discovered that she had been making quarterly payments for the coverage for years. Unfortunately, Sally had no recollection of purchasing such coverage. At first, she thought her identity was stolen but later concluded that she had been the victim of a “scam.”

Sally eventually discovered that her coverage was coordinated by Affinion Group, a direct marketing company which partners with banks to offer free insurance promotions in an attempt to solicit sales. She contacted the company and learned that she had a policy dating back almost two decades to January 1996.

The payments reportedly totaled over $600 over the lifetime of her policy, but Sally never noticed because they were so small and only came out every three months.

Documentation provided by Affinion reportedly showed that Sally had accepted a policy offer of $30,000 in coverage after Bank of America offered her a $1,000 free coverage offer. However, Sally says she did not recognize the writing or signature on the form.

Eventually, Sally figured out that her mother had signed her name on the enrollment form and had named herself as the beneficiary.

“The Internet highway is littered with consumer complaints about unauthorized deductions for AD&D policies people didn’t remember requesting and didn’t know they’d been paying for,” Bach told the Los Angeles Times.

Consumers have blasted these offers as deceptive and claim that the companies in charge intentionally keep costs low so that consumers don’t notice quarterly payments.

Join a Free Accidental Death Insurance Class Action Lawsuit Investigation

If you were charged for accidental death and dismemberment insurance after signing up for a free offer, you may be able to join this accidental death & dismemberment insurance lawsuit investigation.

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This article is not legal advice. It is presented
for informational purposes only.