Question 6

Endowment insurance pays the face amount if the insured survives to the end of a certain period.

Endowment insurance is a type of life insurance policy that provides a lump sum payment, known as the face amount, upon the insured's survival until the policy's maturity date. This policy combines elements of both insurance and savings, ensuring a payout at the end of a specified term.

A) Term insurance.

Term insurance provides coverage for a specified period and pays a benefit only if the insured dies during that term. It does not pay out any amount if the insured survives to the end of the policy period, making it incorrect in this context.

B) Endowment insurance.

Endowment insurance is designed specifically to pay the face amount if the insured survives until the end of the policy term. This characteristic distinguishes it from other types of life insurance and is the reason it is the correct answer.

C) Whole life insurance.

Whole life insurance provides coverage for the lifetime of the insured and includes a savings component. However, it does not have a specific maturity date for a payout unless the policy is surrendered; thus, it does not specifically pay out a face amount at a predetermined time based on survival.

D) Universal life insurance.

Universal life insurance is a flexible premium, adjustable benefit policy that allows for changes in premiums and death benefits. Like whole life insurance, it does not guarantee a payout at the end of a specific term if the insured survives, making it an incorrect choice for this question.

Conclusion

Endowment insurance is the only policy among the options that explicitly provides a payout of the face amount if the insured survives to the end of a designated period. All other options either do not guarantee such a payout or have different structures that focus on death benefits rather than survival benefits. Thus, endowment insurance is definitively the correct choice in this scenario.