Why is the accidental death benefit often referred to as double indemnity?

The accidental death benefit is often referred to as double indemnity because it specifically provides for the payment of twice the face value of the policy in the event of a death that occurs due to an accident. This means that if the policyholder dies as a result of an accident, their beneficiaries will receive a payout that is double the amount originally specified in the policy. This feature is intended to offer additional financial protection and reassurance for policyholders, recognizing the often unforeseen nature of accidental deaths.

The other options do not accurately describe the concept of double indemnity. The first option about renewable policies pertains to the terms of the insurance contract rather than the specifics of the accidental death benefit. The second option, which mentions a flat fee payment regardless of circumstances, misses the point that the value paid out in the case of accidental death is contingent upon the accident, not fixed. Lastly, the coverage of both natural and accidental causes does not align with the definition of double indemnity, which focuses exclusively on accidents resulting in death. Thus, the characterization of the accidental death benefit as double indemnity is precisely about the enhanced payout relevant to accidental fatalities.