29. Sam had a $100,000 5-year, non-renewable level term life insurance policy with his wife as the beneficiary. Sam dies 8 years after the inception date of the policy. How much will be paid to Sam's wife?
Answer: D
Nothing will be paid to Sam's wife.
Since Sam's life insurance policy was a 5-year non-renewable level term policy, it expired after 5 years. As he died 8 years after the policy's inception, it was no longer active, and therefore, no payout will be made to his wife.
A) $100,000
This option suggests that the full amount of the policy would be paid out. However, since the policy lapsed after 5 years, Sam's wife is not entitled to any payout, making this option incorrect.
B) $60,000
This option indicates a partial payout. Given that the policy was non-renewable and expired after 5 years, there is no basis for a partial payout either. Therefore, this option is incorrect.
C) $40,000
Similar to the previous options, this suggests a payout amount that would not be applicable. Since the policy had already expired by the time of Sam's death, no funds would be available to disburse, making this choice incorrect.
D) Nothing
This option accurately reflects the situation. After the 5-year term, the policy coverage ceased, and because Sam died after the term had expired, there is no payout to his wife.
Conclusion
The only correct answer is that nothing will be paid to Sam's wife, as the life insurance policy had expired prior to his death. All other options incorrectly imply that a payout is possible despite the lapse of the policy, which contradicts the terms of a non-renewable level term life insurance policy.