Why Is Life Insurance Not Considered As Indemnity Insurance?

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   Jerry Vanderzanden, CLU, ChFC

   Co-Founder, Coastal Financial Partners Group, California

   The concept of "indemnity insurance" doesn't apply to life insurance. Indemnity policies pay for actual economic loss up to a stated maximum in the policy. The claim needs to be proven by the policy owner. In life insurance, the amount of the actual economic loss is not relevant. When the life insured dies, the insurer is required to pay the total death benefit amount specified in the policy.

   Answered on June 6, 2013

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