Policy Riders, Provisions, Options, and Exclusions
A parent wants life proceeds reserved for a young child. Which arrangement best addresses the problem that an insurer will not pay proceeds directly to a minor?
Answer and explanation
Answer: D. The NAIC advises against naming a minor directly because insurers will not pay the minor. A carefully established trust or estate arrangement can receive and administer the funds for the child.Source: National Association of Insurance Commissioners — Life Insurance Buyer's Guide — PDF page 6, Choose a Beneficiary > minor beneficiaries
More policy riders, provisions, options, and exclusions questions
- A permanent policyowner withdraws the entire available cash value. What may happen to the policy?
- A policy beneficiary designation reads 'my surviving children, per capita.' If one child predeceases the insured leaving two offspring, how are proceeds divided?
- A policy contains a war exclusion. Which document must be reviewed to determine whether a particular death falls within it?
- A policy insures Jordan's life, but Casey is the policyowner. Who generally controls beneficiary designations and permitted policy changes?
- A policy names one primary beneficiary and one contingent beneficiary. The primary beneficiary dies before the insured, but the contingent beneficiary survives the insured. Who receives the proceeds under the usual designation?
- A policyowner compares a cash-value withdrawal with a policy loan. Which distinction is generally accurate?
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