PSI Ohio Insurance Practice Exam

Why is the accidental death benefit known as double indemnity?

1. It pays twice the premium amount

2. It provides twice the face value for accidental death

3. It is awarded under certain conditions only

4. It includes a funeral expense benefit

The correct answer is: It provides twice the face value for accidental death

The accidental death benefit is commonly referred to as double indemnity because it pays out twice the face value of the policy if the death of the insured occurs as a result of an accident. This feature is designed to provide greater financial protection to beneficiaries in the tragic event of an accidental death, recognizing the usually unexpected nature of such fatalities. This term emphasizes the additional payout as a benefit specifically associated with accidents, separate from regular death benefits that would be provided for non-accidental causes. It highlights the value of having extra financial support during such difficult circumstances. Other options discuss different aspects of insurance benefits, such as premium amounts, specific conditions, or additional benefits like funeral expenses, but they do not capture the core reason behind the term double indemnity as it relates specifically to the increased payout for accidental deaths.