Is Life Insurance An Indemnity Policy?
4330 POINTSview profileJerry Vanderzanden, CLU, ChFCCo-Founder, Coastal Financial Partners Group, CaliforniaNo, life insurance is not an indemnity policy. 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 May 15, 2013flag this answer
37376 POINTSview profileDavid G. Pipes, CLU®, RICP®Business Development Officer, T.D. McNeil Insurance Services, Fresno, CaliforniaWhen someone is indemnified they are said to have been “made whole.” When a car is involved in an accident the insurance company returns the car to its pre-accident state and thus indemnifies the car owner. It is impractical to evaluate a human life. The life insurance policy is a binding legal agreement between the insurance company and the owner of the policy to pay a specified amount upon the death of the insured, regardless of their “value” at the time of death.Answered on September 19, 2014flag this answer
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