What happens if the insured on a whole life policy dies before the policy endows?

Study for the AD Banker Life Insurance Exam. Test your knowledge with flashcards and multiple choice questions, each equipped with hints and explanations. Ensure you're prepared for the exam!

When the insured under a whole life policy passes away before the policy endows, a death benefit is paid to the beneficiaries. Whole life insurance is designed to provide a death benefit to the policy's beneficiaries regardless of when the insured dies, as long as the policy is in force.

This means that even if the insured has not reached the endowment age, the life insurance benefit specified in the policy will be paid out upon death. The death benefit is typically larger than the cash value accumulated in the policy, ensuring financial support to the beneficiaries at the time of the insured's death.

In this context, the other options do not align with the function of a whole life policy. The estate receiving the entire cash value does not occur since the cash value is part of the policy and not intended for the estate at the time of death. Voiding the policy does not apply as the purpose of the policy—providing a death benefit—continues until the insured’s death. Refunding the premiums to the policyowner would not be the case, as the intent of whole life insurance is to provide a death benefit rather than to return premiums paid, especially when insurance protection has been offered.

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