Describe double indemnity?
• the policyholder is paying a fixed premium for coverage on a loan that has a decreasing payout
• the policyholder buys gap insurance and is paid out from the base auto insurance and the gap insurance for totaling their car
• a life insurance rider that may result in beneficiaries receiving double the insured amount in case of death or severe injury
• policyholder has both term life insurance and mortgage protection life insurance
Double indemnity refers to a provision in life insurance policies where the beneficiaries receive a double payout if the insured individual dies or suffers severe injury due to a specified covered event. This provision can provide financial security to the policyholder's loved ones in the event of an accident or untimely death. Typically, the double indemnity benefit is triggered if the insured person dies as a result of an accident rather than natural causes.
In addition to life insurance, double indemnity can also apply to other types of insurance policies, such as auto insurance. For example, in the case of an auto insurance policy, the policyholder may purchase gap insurance in addition to their standard coverage. If the policyholder's car is declared a total loss in an accident, the insurance company will pay out the insured amount as well as the amount owed on the loan, as covered by the gap insurance. This ensures that the policyholder does not have to pay out of pocket for the remaining loan balance after their car is totaled.
Lastly, double indemnity can also refer to a combination of different insurance policies held by the policyholder. For instance, a policyholder may have both term life insurance and mortgage protection life insurance. In this case, if the policyholder passes away, their beneficiaries would receive the sum insured under both policies, effectively doubling the payout.
Overall, double indemnity is a term used to describe various insurance scenarios where the policyholder or their beneficiaries receive a double payout either due to a specific provision in the policy or a combination of multiple policies.