Question

With an accidental death and dismemberment policy, the payment of a specified amount, usually a percentage of the principal sum, which varies according to the severity of the injury, is called: ______________.

Answer 1

The payment of a specified amount, usually a percentage of the principal sum, which varies according to the severity of the injury, is called coinsurance.

Step-by-step explanation:

The payment of a specified amount, usually a percentage of the principal sum, which varies according to the severity of the injury, is called coinsurance in an accidental death and dismemberment policy.

With coinsurance, the insurance policyholder pays a percentage of the loss, and the insurance company pays the remaining cost. This helps to share the financial responsibility between the policyholder and the insurance company.

For example, if the policyholder has a severe injury covered by the policy, they may receive a higher percentage of the principal sum as compensation compared to a less severe injury.