What does a life insurance policy guarantee to the stated beneficiary upon the death of the insured?

• A. The cash value
• B. The specified amount of money
• C. The policy's cash value plus dividends
• D. The premium refund

Answer: (B)

Life insurance guarantees a death benefit to the beneficiary upon the insured’s death—the amount stated in the policy as the death benefit. This specified amount, or face value, is what gets paid out, assuming the policy is in force and premiums have been paid.

The cash value is a savings component that grows during the insured’s life and can be accessed by the policy owner, but it is not automatically paid to the beneficiary at death. Dividends, if the policy is participating, are not guaranteed and are not the death benefit; they may affect the policy in various ways but aren’t a guaranteed payout to the beneficiary. A premium refund is not the standard feature of a life policy’s death benefit.

So the guaranteed amount the beneficiary receives is the specified death benefit.