Minnesota Life Insurance License Practice Exam

What responsibility does the insurance company have, according to the insuring clause in a life policy?

1. Make premium payments

2. Pay the death benefit to the beneficiary

3. Invest the cash value

4. Provide policy loans

The correct answer is: Pay the death benefit to the beneficiary

The insuring clause in a life insurance policy clearly outlines the primary responsibility of the insurance company, which is to pay the death benefit to the beneficiary upon the insured's death. This clause is fundamental, as it establishes the insurer's obligation to fulfill its promise under the contract when the policyholder passes away. Essentially, when a policyholder pays their premiums, they are securing a financial benefit for their beneficiaries that will be disbursed regardless of the circumstances surrounding the death (provided that the policy is valid and in force). This element underscores the core purpose of life insurance: to provide financial protection and support to loved ones. While options related to premium payments, investing cash value, and providing policy loans are aspects of a life insurance policy, they do not directly relate to the primary role defined by the insuring clause. These responsibilities pertain to the policyholder's rights and the management of the policy rather than the fundamental obligation the insurer has to pay the death benefit upon the event that triggers the claim.