Sam has a $100,000 5-year, non-renewable level term life insurance with the wife as the beneficiary. Sam died 8 years after the policy. How much will be paid to Sam's wife?

Rationale

Nothing.

The term life insurance policy Sam had was non-renewable and lasted only for 5 years. Since Sam died 8 years after the policy was issued, the coverage had expired, and no benefit will be paid to his wife.

A (Nothing.) CORRECT

This choice is correct because the policy was valid only for 5 years. After this period, coverage ceased, meaning that upon Sam's death 8 years later, the insurance company is not obligated to pay any benefits.

B ($40,000.00) YOUR ANSWER

This amount is incorrect because there is no provision in a term life insurance policy that allows for partial payouts based on time elapsed. Since the policy lapsed after 5 years, there is no payout whatsoever, regardless of the time elapsed.

C ($10,000.00) YOUR ANSWER

This figure is also incorrect as it suggests a specific payout amount that does not align with the terms of a non-renewable term life insurance policy. The policy in question provides no benefits after its expiration, thus no amount is payable.

D ($100,000.00) YOUR ANSWER

While this is the face value of the policy, it is incorrect in this context because the policy was no longer in force at the time of Sam's death. Therefore, the full amount cannot be claimed since the coverage had expired.

Conclusion

In summary, Sam's non-renewable level term life insurance policy expired after 5 years, and since he died 8 years later, no benefits will be paid to his wife. This scenario underscores the critical importance of understanding the terms and duration of life insurance policies, especially regarding their expiration.

Sam has a $100,000 5-year, non-renewable level term life insurance with the wife as the beneficiary. Sam died 8 years after the policy. How much will be paid to Sam's wife?

Nothing.

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