Why did Q's beneficiary receive an amount higher than the face amount for the life insurance policy?

The correct answer is that an insurer must pay interest on proceeds held. When a life insurance policy is paid out to a beneficiary, particularly in instances where the death benefit is not immediately disbursed, the insurer is required to pay interest on the proceeds until they are fully distributed. This means that if there is a delay in processing the death benefit payment or if the funds are held for any reason, the beneficiary may receive an amount that exceeds the face value of the policy when interest is added.

This policy is designed to ensure that beneficiaries do not suffer financially due to delays, and it reflects the insurer's obligation to compensate for the time value of money. Other options, such as the presence of a cash value or additional claimed benefits, could contribute to a payout higher than the face value, but they are not universally applicable in every life insurance situation. Error on the part of the insurer is also not a standard or acceptable reason for the payment amount exceeding the face value.