Body Parts Insurance – Why Not?

From the Editor: This is a guest article by Lorne S. Marr

We’re talking body parts of the human body here, just to be clear. Body parts can be insured and are being insured — mostly by celebrities. The famous lot revel in placing excessive value on their legs, buttocks, chest hair, or voice. While this makes sense to some extent (loss of voice means an immediate loss of a lifetime job for an opera singer), body parts insurance is not for everybody. (Mortgage life insurance, on the other hand, is for nobody and even Wikipedia knows that.)

So, would you want to insure a body part yourself? Unless you’re seriously famous for it, I don’t think it would be a great idea. The reason is that most disability insurance policies cover harm to your body as a whole, which (naturally) includes your body parts as well.

As a matter of fact, virtually every disability insurance plan in essence consists of pieces of separate coverage for body parts, plus some additional terms. Your disability plan will likely list the specific payouts per body part in a nicely laid-out table. Each of your fingers may have a different “worth” according to your policy, depending on how useful it usually is for a person’s life. Your poor pinkies will carry a much smaller value than your thumb or your index finger. This means that the benefit of a disability insurance plan is the fact that it actually covers your entire body with all of its body parts. The downside to these comprehensive plans is the fact that insurers will be very reluctant to discuss with you the pricing on your body parts and it is unlikely that you would negotiate different a weight for any of your body parts. For an increased payout, you’ll just have to take on a more expensive policy. The payouts are simply not separately negotiable in the standardized policies that most of us are in the market for.

Another option for us non-celebrities is trauma insurance. This type of insurance is supposed to compensate one you for the loss of a certain ability. With trauma insurance, you would not insure your eyes, but you would insure against the loss of your sight. You would not insure your voice, but your ability to speak.

Trauma insurance plans are somewhat more akin to body-parts insurance in that they can be tailored to your individual abilities. Trauma insurance can compensate you if your trauma prevents you from doing what you had been doing for a living. The highest payouts are associated with accidental death and life insurance policies. Accidental death can be a policy on its own, or it could be part of a comprehensive disability insurance plan. Life insurance covers accidental death as well by design. Insurance payable upon one’s death, however, hardly qualifies as a substitute for body-parts insurance. Plus, even the highest-payout policies for regular clients seldom surpass the amounts for which celebrities insure their noses, legs, breasts, or teeth. So why would anyone purchase a body-part insurance policy when most needs are abundantly covered by other types of plans? Well, special insurance arrangements easily attract media attention and turn the spotlight onto the insured. It’s interesting — some may even call it outrageous — when a famous singer insures her legs for a few million dollars, even though nobody knows what must happen to them for the diva to cash in. In either case, it’s strange, to say the least, that singers ever insure their legs — a body part that has nothing to do with their highly admired skill…

Read more fun facts about common life insurance myths and misconceptions here.

About the Author: This article brought to you by Lorne S. Marr, an independent insurance broker from Toronto and an expert on ‘no medical’ life insurance.

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