What is a death benefit?

What is a death benefit?

• A. The total cash value of the policy
• B. The sum paid to the beneficiary upon the insured’s death
• C. The surrender value of the policy
• D. The fees collected for maintaining the policy

Answer: (B)

A death benefit is crucial in life insurance policies as it represents the sum of money that is paid out to the designated beneficiary or beneficiaries upon the death of the insured individual. This payment serves to provide financial support and stability to the loved ones left behind, helping them manage expenses and maintain their standard of living after the loss of the insured. Other options listed do not accurately describe the death benefit. For instance, the total cash value of the policy refers to the accumulated savings component in some types of life insurance, which can be accessed during the insured's lifetime but doesn't serve the purpose of providing a payout upon death. The surrender value of the policy is the amount the policyholder would receive if they chose to cancel the policy before it matures, which is also unrelated to the death benefit. Lastly, the fees collected for maintaining the policy are operational costs associated with the insurance but do not contribute to the financial support provided through the death benefit.

A death benefit is crucial in life insurance policies as it represents the sum of money that is paid out to the designated beneficiary or beneficiaries upon the death of the insured individual. This payment serves to provide financial support and stability to the loved ones left behind, helping them manage expenses and maintain their standard of living after the loss of the insured.

Other options listed do not accurately describe the death benefit. For instance, the total cash value of the policy refers to the accumulated savings component in some types of life insurance, which can be accessed during the insured's lifetime but doesn't serve the purpose of providing a payout upon death. The surrender value of the policy is the amount the policyholder would receive if they chose to cancel the policy before it matures, which is also unrelated to the death benefit. Lastly, the fees collected for maintaining the policy are operational costs associated with the insurance but do not contribute to the financial support provided through the death benefit.