An individual purchases a policy that promises to pay the face amount if they are alive in 20 years. What type of policy is this?

A policy that promises to pay the face amount if the insured is alive after a set period, such as 20 years, is classified as an endowment policy. Specifically, a 20-year endowment policy combines elements of both life insurance and savings or investment. It is designed to provide a payout if the insured survives the specified term, which distinguishes it from other types of life insurance products.

In the case of the 20-year endowment, the insured will receive the face amount after 20 years if they are alive. If they pass away during that period, the beneficiaries typically would receive a death benefit, which is not the case in this particular question, as it specifies payment if the individual is alive after the term. This design encourages individuals to save and can be viewed as a way to provide for future financial needs at a specified time, such as funding education or retirement.

Other policy types mentioned, such as term insurance or whole life, do not fit this description. A 20-year term policy only pays a benefit if the insured dies within that 20-year period, while 20-pay life refers to a whole life policy that is paid up after 20 premium payments rather than being contingent on survival at the end of a set term