Washington Life Producer Practice Exam

If Shirley has a $500,000 10-year non-renewable level term life policy and dies 15 years after it was issued, how much will her beneficiary receive?

1. $500,000

2. Nothing

3. Only the cash value

4. $250,000

The correct answer is: Nothing

In this scenario, Shirley has a 10-year non-renewable level term life policy. This means that the policy provides coverage for a specific term of 10 years, during which the insurer agrees to pay a death benefit of $500,000 if the insured passes away. However, once the 10-year term expires, the coverage ceases, and the policyholder does not have the option to renew the policy for additional terms. Since Shirley passed away 15 years after the policy was issued, she was outside the coverage period when she died. At the end of the 10 years, the policy no longer had any force, meaning that no death benefit would be paid out. Therefore, the beneficiary will receive nothing because the policy's coverage lapsed well before Shirley's passing. This underscores the importance of understanding the terms and limitations of life insurance policies.