Final answer:
An insurer must pay a life insurance death benefit claim upon receipt of proof of death, also known as payment upon proof of death. This is part of the broader insurance principle where the insurer provides financial protection against certain events in exchange for regular premium payments.
Step-by-step explanation:
Upon receipt of proof of loss, an insurer MUST pay a life insurance death benefit claim is known as payment upon proof of death. In life insurance policies, the insurer promises to pay out a death benefit to the beneficiaries named in the policy when the policyholder dies. Cash-value or whole life insurance not only provides this death benefit but also accumulates a cash value over time that the policyholder can use under certain conditions. All of this falls under the broader concept of insurance, which is a method of protecting individuals from financial loss. The policyholder makes regular payments, known as premiums, to the insurance company, which in turn agrees to pay out for losses covered by the policy, such as medical expenses, policyholder death, and damages to possessions like cars and dwellings.Other terms related to this are coinsurance, where the policyholder pays a percentage of the loss and the insurance company pays the rest, and moral hazard, a situation where the insured might take bigger risks because they have insurance coverage. Understanding these terms can help navigate and utilize insurance policies effectively.