35. A husband and wife have a disabled child who is financially dependent upon them. The death of one parent would not result in financial disaster for the child, but the death of both parents would. Which policy should they purchase?
Answer: C
Second-to-die policy is the best choice for the couple.
A second-to-die policy, also known as a survivorship life insurance policy, is designed to pay out the death benefit only after both parents have passed away. This type of policy ensures that the financial needs of their disabled child are met in the event that both parents die, addressing the couple's concern about their child's financial dependency.
A) Juvenile policy.
A juvenile policy is intended for minors and provides coverage for the child rather than the parents. This option would not address the couple's primary concern of providing financial support for their disabled child in the event of both parents' deaths.
B) First-to-die policy.
A first-to-die policy pays out upon the death of the first parent, which may not sufficiently secure the financial future of the disabled child if the surviving parent does not have adequate means to support the child. This option fails to address the couple's specific need for coverage that ensures financial stability after both parents have passed away.
C) Second-to-die policy.
This policy is specifically designed to pay out after both parents have died, thereby providing financial security for their disabled child. It directly aligns with the couple's needs, ensuring that their child will be financially supported in the event of both parents' deaths.
D) Family protection policy.
While a family protection policy may offer various coverage options for the entire family, it is not specifically tailored to address the scenario where both parents need to be insured for the benefit of their disabled child. This option may not provide the focused financial assurance that a second-to-die policy offers.
Conclusion
The second-to-die policy is the most appropriate choice for the couple, as it guarantees that their disabled child will receive financial support only after both parents have passed away. The other options either fail to provide adequate coverage in the relevant scenario or do not directly meet the unique needs of the family. Thus, only the second-to-die policy ensures the necessary financial security for their child.