Question 70

The policy will not provide further insurance protection.

Once Joe dies, the 'first-to-die' policy pays out the agreed sum, which in this case is $60,000. After this payment, the policy ceases to provide any further insurance coverage.

A) will not provide further insurance protection.

This option accurately describes the nature of a 'first-to-die' joint life insurance policy. Once one of the insured individuals (in this case, Joe) passes away, the policy pays out the death benefit and terminates, meaning no further coverage is available for the surviving brothers, Rob and Mike.

B) must be shared equally by Rob and Joe's wife.

This option is incorrect because the death benefit from a 'first-to-die' policy is paid directly to the beneficiary named in the policy, not divided equally among surviving parties. If Joe's wife is the designated beneficiary, she would receive the entire amount, not Rob.

C) will accumulate with interest until another brother dies and then be awarded to the surviving brother.

This option is incorrect as 'first-to-die' policies do not accumulate interest or benefits after the first death. The policy pays out a lump sum upon the death of the first insured individual and does not continue to exist in any form for the remaining brothers.

D) must be awarded to Joe's estate.

This option is also incorrect since the proceeds of the policy are paid directly to the designated beneficiary, which may or may not be Joe's estate. The specifics depend on the beneficiary designation and not on the estate itself.

Conclusion

The correct answer, A, highlights the fundamental characteristic of a 'first-to-die' policy, which is that it terminates after the initial payout. The other options fail to recognize this crucial aspect and misinterpret the distribution of the policy's proceeds, which are not subject to further claims once the benefit has been disbursed.