West Virginia State Life Insurance Practice Exam

If K pays on a $20,000 20-Year Endowment policy for 10 years and dies, how much will the beneficiary receive?

1. $10,000

2. $20,000

3. $30,000

4. $40,000

The correct answer is: $20,000

In a 20-Year Endowment policy, the insured must pay premiums for a specific period, which is 20 years in this case. If the insured dies within this period, the beneficiary is entitled to the death benefit, which is equal to the face amount of the policy. Here, K has a policy with a face value of $20,000. Since K died after paying premiums for 10 years, the beneficiary will receive the full face value of the policy, which is $20,000. The policy does not provide any additional payout for the premiums paid or for any other reason; it solely guarantees the specified death benefit amount upon the insured's death during the term of the policy. Thus, the beneficiary will receive $20,000.