Tennessee Insurance Practice Exam

Which of the following accurately describes the term "capital sum" in an Accidental Death and Dismemberment policy?

1. Compensation for funeral expenses

2. Payment for specific losses like limbs or eyesight

3. Whole life coverage amount

4. Payout based on accidental death only

The correct answer is: Payment for specific losses like limbs or eyesight

The term "capital sum" in an Accidental Death and Dismemberment (AD&D) policy refers specifically to the payment made for certain defined losses resulting from an accident. This includes compensation for the loss of a limb, eyesight, or other specific body parts, as outlined in the policy. The capital sum is predetermined and is stated in the policy document, highlighting the insurance company's commitment to provide a financial benefit for these types of losses. In the context of an AD&D policy, it is important to note that while funeral expenses may be covered under other types of insurance, they do not constitute the capital sum associated with dismemberment. Similarly, a whole life coverage amount pertains to a completely different type of life insurance policy and is unrelated to the specific events covered by an AD&D policy. Additionally, payouts based on accidental death only typically address the death benefit and do not encompass the dismemberment component, which is clearly defined by the capital sum as stated.