DECA Hospitality Services Team Decision Making Practice Exam

Which type of insurance provides a cash benefit upon the policyholder's death?

1. Health insurance

2. Life insurance

3. Property insurance

4. Liability insurance

The correct answer is: Life insurance

Life insurance is designed to provide financial protection to the policyholder's beneficiaries in the event of the policyholder's death. This type of insurance typically pays out a predetermined sum, known as the death benefit, to the designated beneficiaries. The purpose of life insurance is to help cover expenses such as funeral costs, debt repayments, and living expenses for those relying on the deceased for financial support, thereby ensuring their loved ones are taken care of in a difficult time. In contrast, health insurance primarily covers medical expenses and does not directly pay out a cash benefit upon death. Property insurance protects against loss or damage to physical assets, while liability insurance helps cover legal liabilities for injuries or damage to others. None of these types of insurance offer the specific benefit of providing a cash payment directly tied to the policyholder’s death, which is the distinct feature of life insurance.