Life Insurance Policy Provisions, Options, and Riders
Why is naming a minor directly as beneficiary of a life policy usually discouraged?
Answer and explanation
Answer: B. A minor lacks capacity to give a binding release for the proceeds, so payment usually waits on the appointment of a guardian, which costs time and money. The usual answer is a trust or a custodial arrangement, not a change in the tax treatment or an automatic hold by the insurer.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, minors as beneficiaries
More life insurance policy provisions, options, and riders questions
- An insured becomes totally disabled and holds a waiver of cost of insurance rider. When does the waiver ordinarily begin?
- An insured dies with a policy loan outstanding. How does the insurer settle the claim?
- An insured dies with dividends accumulated at interest still on deposit. What does the beneficiary receive?
- An insured exercises a guaranteed insurability option after adopting a child. Which premium basis generally applies to the newly purchased coverage?
- An insured wants a benefit that supplies income after a qualifying total disability rather than merely waiving policy charges. Which rider most directly fits?
- An insured with an accidental death and dismemberment rider loses the sight of both eyes in a covered accident. What does the rider ordinarily provide?
621 New York questions like this one.
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