Rob purchased a standard whole life policy with a $500,000 death benefit when he was age 30. His insurance agent told him the policy would be paid up if he reached age 100. The present cash value of the policy equals $250,000. Rob recently died at age 60. The death benefit would be

• A. $250,000
• B. $500,000
• C. $750,000
• D. $1,000,000

Answer: (B)

In a standard whole life policy, the death benefit is the policy’s face amount and generally stays at that level for life, while the cash value grows separately as a living benefit. The fact that the policy is paid up at age 100 affects premiums, not the death benefit itself. Unless there is an outstanding loan against the cash value, the death benefit paid to beneficiaries remains the face amount, regardless of how large the cash value has grown.

So, for Rob, even though the cash value is $250,000 and he dies at age 60, the death benefit would be the $500,000 face amount. If there were any loans against the cash value, those would reduce the death benefit, but none are mentioned.