Certified Financial Consultant (CFC) Practice Exam

Which of these is considered a 'benefit' under a life insurance policy?

1. Claim payment upon death

2. Cash value accumulation

3. Premium refunds

4. Policy surrender value

The correct answer is: Claim payment upon death

A claim payment upon death is considered a 'benefit' under a life insurance policy because it represents the primary purpose of such insurance. The fundamental role of life insurance is to provide a financial safety net for the beneficiaries upon the policyholder's passing. The benefit ensures that loved ones receive a monetary payout, which can help cover living expenses, debts, and other financial obligations, thus offering peace of mind to the insured while they are alive. While cash value accumulation, premium refunds, and policy surrender value can also be features of certain life insurance plans, they do not primarily define the core benefit of a life insurance policy. Instead, those elements pertain more to the policy's structure and the potential financial benefits realized during the lifetime of the insured or upon cancellation of the policy, rather than the crucial benefit of providing for one’s beneficiaries after death.