Policy Riders, Provisions, Options, and Exclusions
What practical step reduces the risk that a common disaster leaves proceeds without an intended recipient?
Answer and explanation
Answer: B. Naming a contingent beneficiary gives the proceeds a destination where the primary does not survive, which is the situation a common disaster creates. Naming the estate brings the proceeds into probate, consumer guidance advises against naming a minor directly because insurers will not pay a minor, and leaving the line blank creates the problem rather than solving it.Source: NAIC — Life Insurance Buyer's Guide — Buyer's Guide page 6, Naming beneficiaries
More policy riders, provisions, options, and exclusions questions
- Why does the ability to assign a life policy matter to an owner?
- Why is naming a minor child directly as a life insurance beneficiary problematic?
- Why might an owner prefer reinstating a lapsed policy over buying a new one?
- A beneficiary asks which part of the policy states the insurer's core promise to pay. Which provision should the producer point to?
- A buyer compares annual and monthly premium modes for the same term policy. Which cost point should the buyer verify?
- A cash-value policy has an elected automatic premium loan provision and an unpaid premium at the end of the grace period. If sufficient loan value exists, what occurs?
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