Life Insurance Policies
Why does New York limit the amount of insurance that may be written on the life of a minor?
Answer and explanation
Answer: B. The limits keep the cover proportionate to a genuine interest, since a child's death causes final expenses rather than income loss, and disproportionate amounts create a moral hazard. Child mortality, capacity to contract and guaranty coverage are not the reason for the ceiling.Source: N.Y. Ins. Law § 3207 — § 3207(b)
More life insurance policies questions
- A 20-year term policy permits conversion only during its first 12 years. Which statement correctly describes the feature?
- A client has a lump sum from an inheritance and wants to leave the largest possible sum to heirs, with no further payments.
- A client holds employer-provided level term cover and asks whether personal term insurance is still needed.
- A client wants cover that will still be in force at age ninety and a value that can be reached in the meantime. Which is indicated?
- A client wants flexible premiums and an adjustable death benefit, but also wants to place policy value in equity and bond portfolios and accepts that those values can rise or fall with market performance. Which explanation best distinguishes the product from non-variable universal life?
- A convertible term policy says conversion is available only under the policy's stated conversion provision. The owner asks for permanent coverage beyond the policy's allowed conversion amount without underwriting. What is the best response?
621 New York questions like this one.
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