South Carolina Life Insurance Practice Exam

When does a 20-pay whole life policy typically endow?

1. At the term's end

2. At the insured's retirement

3. When the insured reaches age 100

4. After 20 years

The correct answer is: When the insured reaches age 100

A 20-pay whole life policy typically endows when the insured reaches age 100. This is because whole life insurance is designed to provide coverage for the lifetime of the insured. The "20-pay" aspect means that premiums are paid for a period of 20 years, after which the policy is considered paid up, but the coverage continues until the insured's death or until they reach the endowment age, which is generally set at age 100. At age 100, the policy matures, and the face amount of the policy is paid out to the insured or their beneficiary. This is a key feature of whole life insurance: it ensures that the policy will provide a benefit either upon the death of the insured or at a specified age, fulfilling the contractual obligation of the insurer. Other choices do not align with the characteristics of a 20-pay whole life policy, as they either suggest an end based on time or conditions unrelated to the lifespan of the policy.