Life Term, Whole Life & Term to 100 question: named beneficiary receive

LifeTerm, Whole Life & Term to 100

Tobias, 67, owned a $250,000 participating whole life policy with a cash surrender value of $48,000. He had taken a $20,000 policy loan, and $1,200 of loan interest had accrued and was unpaid when he died. His daughter is the named beneficiary. Ignoring dividends, how much does his named beneficiary receive?

A $202,000
B $228,800
C $230,000
D $250,000

Show the answer and explanation

Answer: B. $228,800

An outstanding policy loan and its accrued interest are deducted from the death benefit: $250,000 − $20,000 − $1,200 = $228,800. $230,000 forgets the unpaid interest, and $250,000 ignores the loan. $202,000 subtracts the cash value, but in a whole life policy the cash value is part of the death benefit, not an amount paid on top of it or taken away from it. Source: Insurance Act (BC), RSBC 2012, c. 1, s. 42(2)(f)(ii) (policy must state the loan option) (current to 6 Oct 2026); uniform life provisions in the common-law provinces; CISRO LLQP Curriculum (May 2015; current as at 12 Oct 2026), Life component 2.1 (whole life: cash values, policy loans).

Common mistake

Treating the cash value as a separate amount added to, or deducted from, the death benefit.

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Original study material mapped to the public CISRO curriculum; not a real test question.Not affiliated with CISRO, CCIR or any provincial insurance regulator. Verify figures and rules against current guidance before relying on them.