Life Insurance Policy Provisions, Options, and Riders
A beneficiary receiving instalments under a spendthrift clause offers those future payments as security for a loan. What is the position?
Answer and explanation
Answer: D. A spendthrift clause makes the retained instalments non-assignable, so a lender cannot take them as security and the beneficiary cannot pledge them. Notice to the insurer and a partial pledge do not overcome the restriction.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, spendthrift clause
More life insurance policy provisions, options, and riders questions
- What does the straight life income settlement option guarantee to the payee?
- What follows from naming the insured's estate, rather than a person, as the beneficiary of the policy?
- What happens to a spouse or other-insured term rider if the base insured dies first?
- What happens to dividends left with the insurer under the accumulation at interest option?
- What is fixed and what varies under the fixed-amount settlement option?
- What is fixed and what varies under the fixed-period settlement option?
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