Rhode Island Life Insurance Practice Exam

When is the benefit from a Whole Life policy paid?

1. When the policyholder reaches retirement age

2. After the policy has been in effect for 10 years

3. When the insured dies or at the policy's maturity date, whichever happens first

4. Upon cancellation of the policy

The correct answer is: When the insured dies or at the policy's maturity date, whichever happens first

The benefit from a Whole Life policy is paid when the insured dies or at the policy's maturity date, whichever happens first. Whole Life insurance is designed to provide coverage for the entire lifetime of the insured, ensuring that a death benefit is available to beneficiaries whenever the insured passes away. Additionally, these policies have a guaranteed maturity date, often at age 100 or 121, at which point the policyholder may receive the face value of the policy if they are still alive. This structure emphasizes the lifelong coverage aspect of Whole Life insurance, as it assures policyholders that their loved ones will receive financial support in the event of their death, regardless of when that may occur. The maturity date ensures that the policyholder also has a return on their investment in cases where the insured outlives the average lifespan. Therefore, the key feature that distinguishes this answer is the combination of death benefit payout and potential maturity payout.