Mississippi Property & Casualty Practice Exam

The payment to a surviving spouse upon the death of an insured is identified as what?

1. Dividend

2. Lump sum benefit

3. Death benefit

4. Policy payout

The correct answer is: Lump sum benefit

The payment made to a surviving spouse upon the death of an insured is identified as a death benefit. This term specifically refers to the money paid out from a life insurance policy upon the insured individual's passing. The death benefit serves as financial support for the beneficiaries, helping them to cover expenses such as funeral costs, outstanding debts, and ongoing living expenses. The concept of a death benefit is fundamental in life insurance policies, as it is typically the primary purpose for purchasing such coverage. Beneficiaries generally receive this amount in a lump sum or as structured payments, making it a crucial aspect of financial planning for families. While there are other terms like "lump sum benefit" that may describe the method of payment, they do not specifically denote the purpose of the payment itself. In the context of insurance, the death benefit is the term that directly relates to the payout designed to provide financial assistance after the policyholder's death.