Final answer:
The total benefits payable to Steve's beneficiary is $560,000. This includes $60,000 from the decreasing term policy and $500,000 from the whole life policy.
Step-by-step explanation:
To calculate the total benefits payable to Steve's beneficiary, we need to consider the decreasing term policy and the whole life policy separately:
For the decreasing term policy: Since Steve bought a 20-year policy in 2001 and he died in 2006, the policy was in effect for 6 years. The death benefit of the policy decreases over time, so we need to calculate the benefit for each year. Assuming it decreases linearly, we can find the benefit for each year by dividing the initial benefit of $200,000 by the number of years. In this case, the yearly benefit would be $200,000 / 20 = $10,000. Multiplying this by the number of years the policy was in effect (6), we get a total benefit of $60,000.
For the whole life policy: The whole life policy has a fixed death benefit of $500,000. Since Steve died in 2006, the policy was in effect for 5 years. Therefore, the total benefit payable from the whole life policy is $500,000.
To calculate the total benefits payable to Steve's beneficiary, we need to add the benefits from both policies: $60,000 + $500,000 = $560,000.