Life Insurance Policies, Provisions, Options and Riders Practice Test – Exam Prep

In a "first to die" joint life policy, the policy is designed to pay out a death benefit upon the death of the first insured individual. When Mike dies first in this scenario, the life insurance proceeds are triggered, and the policy terminates. The coverage ceases to provide any further insurance protection because the claim is settled at the moment of Mike's death.

This means that as soon as Mike passes away, the insurance company will pay the specified amount, in this case, $100,000, to the designated beneficiary, which may include Shawn or Dave, depending on how the policy was structured. After the payment is made, the policy no longer exists, and thus no further coverage would be available for any future deaths—including those of Shawn or Dave. This structure is specifically intended to provide financial support to the surviving individuals upon the loss of the first insured.