Final answer:
The beneficiary will receive the full $10,000 term life insurance benefit from Lyle's policy because he was covered at the time of his death, and the earned premium does not reduce the benefit amount.
Step-by-step explanation:
The question relates to the terms of a term life insurance policy and how benefits are paid out upon the policyholder's death. In the scenario given, Lyle has a $10,000 term life policy for which he has paid the annual premium on February 1. Despite his failure to renew the policy, he still meets demise within the coverage period. As the policy is active at the time of Lyle's death, the beneficiary would be entitled to receive the full death benefit amount of the policy, which in this case is $10,000.
The earned premium, which is $200 in this context, is the portion of the premium that the insurance company has effectively 'earned' by providing insurance coverage through February. It is not deducted from the benefit paid to the beneficiary. Therefore, the calculation of the beneficiary payment does not require subtracting the earned premium from the death benefit. The beneficiary will receive the entire $10,000 from Lyle's term life insurance policy.