If a life insurance policy's cash value equals the policy's face amount and the proceeds are paid to the policyowner, what is this called?

• A. Maturity
• B. Endowment
• C. Surrender
• D. Face value

Answer: (B)

This is endowment. In an endowment arrangement, the policy is designed so the cash value can grow to equal the policy’s face amount, and when that happens the insurer pays the face amount to the policyowner, because the living benefit has matured. Surrender would mean taking the cash value and ending the policy, often receiving less than the face amount. Maturity is about the policy reaching its end and paying the face amount, but the specific cue here—the cash value equaling the face amount and the payout to the owner—points to an endowment feature. Face value is simply the stated death benefit, not the living-claims payout described.