Tennessee Insurance Practice Exam

What does a Face Amount Plus Cash Value Policy pay upon the insured's death?

1. Only the face amount

2. Face amount plus cash value

3. Just the cash value

4. Face amount minus cash value

The correct answer is: Face amount plus cash value

A Face Amount Plus Cash Value Policy is designed to offer a benefit that combines both the policy's face amount and its accumulated cash value. Upon the insured's death, the beneficiaries receive the total of the face amount, which represents the guaranteed death benefit, in addition to the cash value that has built up over the life of the policy. This can provide additional financial support to the beneficiaries, as they receive not only the fundamental death benefit but also any savings component that the policyholder may have accumulated. This comprehensive payout reflects the dual nature of the policy, which serves both as a protection mechanism against the risk of death and as a savings instrument. The ability to access the cash value can also benefit the policyholder while they are alive, providing flexibility and options that standard term policies do not offer. Other policy types or designs may not provide this added benefit, making this particularly advantageous for those looking to ensure that their loved ones have access to both immediate financial support and any accumulated savings at the time of their passing.