7. Sarah Harding is insured under a $100,000 10-year Level Term Life Insurance Policy. If Sarah dies during the third year of the policy period, her beneficiaries will receive
Answer: D
Sarah's beneficiaries will receive $100,000.00.
If Sarah dies during the third year of the policy period, her beneficiaries will receive the full face value of the life insurance policy, which is $100,000.
A) $30,000.00
This option is incorrect because it does not reflect the terms of a level term life insurance policy, which guarantees a specific payout upon the insured's death during the policy term. A payout of $30,000 would be significantly less than the policy's face value.
B) $60,000.00
This option is also incorrect. Similar to Option A, $60,000 does not align with the guaranteed payout structure of a level term life insurance policy. The full amount of insurance is payable upon death within the term, not a reduced amount.
C) $70,000.00
Option C is incorrect. A payout of $70,000 does not correspond to the policy's face value and fails to adhere to the guarantees provided by a level term life insurance policy. The beneficiaries are entitled to the full amount specified in the policy.
D) $100,000.00
This option is correct as it represents the full face value of the policy. Under a 10-year level term life insurance policy, the beneficiaries are entitled to the entire $100,000 if the insured dies at any time within the ten-year term.
Conclusion
The correct answer is $100,000.00 because level term life insurance policies provide a guaranteed payout equal to the face value upon the death of the insured during the policy term. All other options fail to reflect this guarantee, making them incorrect choices.