If a payout is made on a policy, what happens to the policy?

If a payout is made on a policy, what happens to the policy?

• A. The policy will be canceled immediately.
• B. The policy will remain active and eligible for further payouts.
• C. The policy can be reinstituted only with a new application.
• D. The policy is suspended for the rest of the year.

Answer: (B)

When a payout is made on a policy, the policy typically remains active and continues to provide coverage for future claims. This means that the insured individual is still entitled to benefits from the policy as long as the terms of the policy are met and premium payments are up to date. For various types of insurance, such as life or health policies, coverage often continues even after a claim has been paid, allowing the policyholder to access further benefits if needed. This ongoing eligibility is key to ensuring that policyholders are protected beyond a single incident, reflecting the foundational principle that insurance is designed to provide continued risk coverage.

When a payout is made on a policy, the policy typically remains active and continues to provide coverage for future claims. This means that the insured individual is still entitled to benefits from the policy as long as the terms of the policy are met and premium payments are up to date.

For various types of insurance, such as life or health policies, coverage often continues even after a claim has been paid, allowing the policyholder to access further benefits if needed. This ongoing eligibility is key to ensuring that policyholders are protected beyond a single incident, reflecting the foundational principle that insurance is designed to provide continued risk coverage.