What is the term for the amount paid out by a life insurance policy when the insured dies?

The amount paid out by a life insurance policy when the insured dies is referred to as the death benefit. This is a critical component of life insurance, designed to provide financial support to the beneficiaries of the policyholder after their passing. The death benefit is typically a predetermined sum that the insurance company agrees to pay upon the death of the insured, which can help cover expenses such as funeral costs, debts, and ongoing living expenses for the beneficiaries.

In the context of life insurance, a premium is the amount the policyholder pays to keep the policy active, while cash value refers to the savings component present in certain types of permanent life insurance policies. An endowment policy, on the other hand, is a specific type of life insurance that pays out a lump sum after a specific period or upon the insured's death, but it is not the general term for the payout upon death.

Understanding these terms is essential for anyone studying life insurance, as they represent fundamental concepts that are frequently encountered in practice.