Maryland Life and Health Insurance License Practice Exam

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

1. $500,000

2. $250,000

3. $0

4. $100,000

The correct answer is: $0

In the scenario presented, Shirley has a 10-year non-renewable level term life insurance policy. This type of policy provides coverage for a specific term—in this case, 10 years—at a fixed death benefit amount of $500,000. However, once the term expires at the end of the 10 years, the coverage ends, and no death benefit is payable thereafter. Since Shirley dies 15 years after the policy starts, this is well beyond the 10-year coverage period. After the term expires, the life insurance policy does not provide any benefits. Therefore, despite the initial value of the policy, the beneficiary will not receive any payout because the policy is no longer in effect at the time of Shirley's death. The correct conclusion is that her beneficiary will receive $0.