Well, still, one dead pixel is a dead pixel. You didn't order your tablet under the pretense that it would come with a dead pixel. But, it's really up to you if it is an issue you want to address.
Not really sure what issue you are talking about, but, if it's affecting the functionality of your tablet, I would assume it would be covered under warranty.
A good way to get a clear answer to that question though would be to contact Asus. Their CSRs were very helpful in the three times I talked with them. I'm sure they'd be able to give you a clear answer if it's covered or not.
Doesn't sound like a bad deal. I have the insurance on my phone because I didn't want to have to deal with it if anything happened. And, with phones, you carry them with you all the time, take them out, drop them, etc. I'm much more careful with my tablet though and it never goes anywhere other than the case I carry it in, and, my desks at work and at home. If you are that careful with it, you might not need something like that. But, two years for 40 bucks isn't a bad deal, no. Then again, your tablet was only 200 bucks, so, that is 20% the cost you already paid. Maybe for a more expensive tablet like the Prime, but, for something that only ran me 200 bucks, I probably wouldn't pay for insurance on it personally.