Health · Chapter 13 · Limited Policies — Accident Only
Principal Sum
Definition
The DEATH benefit payable under an AD&D policy when death results from an accident. It equals the face amount purchased and is the maximum the policy will pay.
Example
A policy paying $50,000 for accidental death has a principal sum of $50,000 — the most extreme dismemberments (both feet, sight in both eyes) also pay 100% of it.
Exam tip
PRINCIPAL = death (and the policy maximum) · CAPITAL = dismemberment. Memory hook: your life is your PRINCIPAL asset.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
Related terms