Rhode Island Life Insurance Practice Exam

An endowment policy is designed to pay a death benefit if the insured passes away during the term of the policy. Alternatively, if the insured survives until the end of the policy term, the insurance company pays out the maturity benefit, which is typically a lump sum. This dual function makes endowment policies unique compared to other life insurance types. They serve both as a savings vehicle and a protection plan, as they are meant to provide a benefit whether the insured dies before the term ends or lives to see it through.

In contrast, term life insurance strictly provides a death benefit only if the insured dies within the specified term and does not accumulate cash value. Universal life insurance offers flexible premium payments and lifelong coverage, but it does not guarantee a payout just for living to a certain age. Survivorship policies typically cover two lives and pay out upon the death of the second insured, without offering a maturity benefit. Thus, the endowment policy is the correct answer because it explicitly provides a benefit if the insured survives to the end of a designated period.