Texas Life Agent Practice Exam

John Livingston owns a 30-Pay Life policy that he purchased at the age of 30. The cash value will equal the face amount of the policy when he reaches the age of?

1. 90

2. 100

3. 65

4. 80

The correct answer is: 100

In a 30-Pay Life policy, the insured pays premiums for 30 years and the policy typically accumulates cash value over that time. Once the cash value equals the face amount of the policy, the policyholder can access this cash value, and it is often referred to as being “fully paid up” regarding death benefits. In this scenario, since John Livingston purchased his 30-Pay Life policy at age 30, he will pay premiums until he is 60 years old (30 years of payments from age 30). The cash value accumulation continues even after the payment period has ended. Generally, the cash value will equal the face amount of the policy around age 80 to 90, but it is common for most 30-Pay Life policies to be designed such that the cash value matches the face value when the insured reaches the age of 100. Therefore, the choice that suggests the expected age when the cash value will equal the face amount aligns with the standard life insurance industry expectancy for this type of policy is age 100.