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What is Double Indemnity?

By Anna Clark
Updated May 16, 2024
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Double indemnity is a clause or provision in an insurance policy in which the company pays the beneficiary approximately double the amount of the standard contract in certain cases of accidental death. Double indemnity does not cover murder or suicide, or deaths by natural causes. In instances where the cause of death is unclear or suspicious, the insurance company typically does not pay the money until enough evidence is gathered to indicate that the death was indeed an accident. Beneficiaries who feel they are due this money may sue the insurance company for breach of contract.

This insurance coverage is also alternatively known as an "accidental death benefit." Despite its popular name of "double indemnity," however, companies do not necessarily offer exactly twice the amount of the face value of the policy in cases of accidental death. It may be a different multiple of this value; the specific terms are particular to each agency.

Double indemnity coverage is typically offered as a supplement that one can add to the life insurance that he or she purchases. It usually requires a more expensive premium. Coverage of children and people with dangerous jobs is also more expensive. Some policies expire when the person covered by it reaches a certain age, such as 65 or 70, when accidents are considered more likely to occur. It is because of these provisions, and because the actual number of accidental deaths each year is quite low, that companies are able to finance double indemnity.

Not all accidental deaths are covered by double indemnity; most polices specifically exclude its coverage from instances when the covered person is deemed to be partially responsible for it, by, for example, taking drugs or behaving recklessly. As well, death resulting from war or illegal activities are usually excluded. There are also limits on how much time may go by between the accident and the death. For example, the insured person may need to die within 90 days of the accident for the double indemnity benefit to go into effect.

This type of insurance coverage is commonly associated with the 1944 American noir film directed by Billy Wilder called Double Indemnity, and based on a Raymond Chandler novella of the same name. The crime story is based on a New York woman who conspires with her lover to kill her husband after he takes out a life insurance policy that has a substantial double indemnity pay-out.

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Discussion Comments
By PinkLady4 — On Sep 15, 2011

It sure seems like there are so many exclusions to what can be called an accidental death by insurance companies, that they don't pay out double indemnity benefits to very many beneficiaries.

If an accident happened at home and the person was supposedly alone, it may look like an actual accident. Maybe the victim was found dead at the foot of the stairs. The insurance company might claim that maybe someone pushed the person down.

In a court of law, if there was some evidence that a crime happened, but not compelling evidence, I wonder if the insurance company would pay the double indemnity.

By sweetPeas — On Sep 14, 2011

I'm sure that the insurance companies have completely thought out the scenario of accidental deaths and double indemnity. They keep a lot of data on demographics so they know a lot about rates of accidental deaths, ages, and other data.

Their charts tell them fairly closely, how much in premiums they get, and what the chances of paying double indemnity or other types of benefits are. They know approximately how much they can afford to pay out and then they adjust so that they can make money for their company.

By CaithnessCC — On Sep 14, 2011

It strikes me that there are really very few double indemnity insurance policies that are actually worth it. By the time you dodge all the clauses there's not much left!

Maybe a death caused by an accident on public transport would qualify, but I can't think of many more cases. Plus, who needs to be fighting insurance companies for cash following the death of a loved one?

I think it makes more sense to buy a larger regular policy, which would cover most causes of death.

By everetra — On Sep 13, 2011

@NathanG - Yeah, the insurance companies know what they are doing.

I do think however that they would insist on proof that an accidental death had taken place, as the article says. I don’t think they would pay out simply to anyone who claimed the accidental death of a beneficiary.

They also know that some unscrupulous people will try to “take out” a loved one in order to cash in on a policy; that’s a horrifying thought, but it’s true.

By NathanG — On Sep 12, 2011

@starrynight - While I somewhat share your cynicism about insurance companies not wanting to pay the double indemnity benefit, I actually think this policy works to their benefit.

I believe very few of the deaths are the results of accidents. I am sure the industry has crunched the actual numbers. I believe these companies can actively market this policy knowing that the vast majority of their customers are not going to need it.

In the meantime, the insurance company keeps raking in the more expensive premiums.

By starrynight — On Sep 12, 2011

@ceilingcat - That makes sense. Somehow though, I doubt double indemnity gets paid out too often.

It's been my experience that an insurance company will usually do everything they can to avoid paying out any benefits. Just imagine the lengths a company might go to to avoid paying out a double benefit! I imagine proving someone's death was accidental is probably pretty difficult.

By ceilingcat — On Sep 11, 2011

I think this coverage makes a lot of sense. If someone dies an accidental death, chances are they are going to die quite a bit younger than if they'd died of an illness or something.

So, that's a lot less years of working and contributing to their family finances. It stands to reason the payout should be more to cover the families needs.

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