A life insurance policy with a double indemnity rider pays an additional benefit if the insured dies as the result of an accident. In which scenario would the double indemnity apply?

• A. Dies from natural causes
• B. Dies due to a chronic illness
• C. Dies in a boating accident
• D. Dies instantly from a car accident

Answer: (D)

The key idea is that a double indemnity rider pays an extra amount when death is caused by an accident. An accident is an external, unintended event that leads to death, rather than death from natural causes or from a chronic illness.

Dying instantly in a car accident fits that definition perfectly—it's an external, unforeseen event that directly results in death, so the rider would trigger and provide the additional benefit on top of the base death benefit. If death were due to natural causes or a chronic illness, the accidental death rider would not apply.

A boating accident can also be accidental in many policies, but the important point is that the death results from an accident. The instant car crash scenario clearly demonstrates that, making it the best example of when the double indemnity would apply.