AD&D benefits are paid through two different methods, though always for a specific amount.
- Principal Sum
- Capital Sum
The principal sum is the stated amount payable as a death benefit if death is due to an accident. For instance: Joe took out a disability income policy for $100,000 and suffered an accident in which he died - the policy will pay $100,000.
The capital sum is the amount payable for the accidental loss of eyesight or for an accidental dismemberment. It is usually a percentage of the principal sum and varies according to the severity of the injury.
If Joe had been involved in an accident and did not die but lost a finger, a capital sum amount would be payable. Yet it would pay a smaller benefit than, for instance, if he had lost an arm in the accident - losing a finger would not be as debilitating as losing an entire arm.
Some policies will pay double or triple indemnity (even quadruple in some) in certain situations if the insured dies.
