40. When beneficiaries are designated 'per capita' in a life insurance policy, it means
Answer: D
Surviving beneficiaries must share equally in the death benefits regardless of heirs of beneficiaries who predecease the insured.
When beneficiaries are designated 'per capita' in a life insurance policy, it indicates that surviving beneficiaries will share the death benefits equally among themselves, without consideration for any heirs of those beneficiaries who may have died before the insured.
A) the policyowner cannot revoke the class designation.
This option is incorrect because a policyowner retains the right to change or revoke beneficiary designations, including class designations, at any time unless specified otherwise in the policy.
B) surviving beneficiaries must divide their share of the death benefits among any heirs of beneficiaries who predecease the insured.
This statement is incorrect as it misinterprets the per capita designation. Under this arrangement, surviving beneficiaries do not have to share their benefits with the heirs of those who predecease the insured, but rather share equally among themselves.
C) the policyowner cannot designate minor children as beneficiaries.
This option is also incorrect. While there may be practical considerations regarding designating minors, there is no inherent restriction in life insurance policies preventing policyowners from naming minor children as beneficiaries.
D) surviving beneficiaries must share equally in the death benefits regardless of heirs of beneficiaries who predecease the insured.
This statement accurately reflects the meaning of 'per capita' designations. It clarifies that the benefits are divided among the surviving beneficiaries only, without regard for the deceased beneficiaries' heirs.
Conclusion
Option D is definitively correct as it clearly outlines the principle of per capita designations in life insurance policies. In contrast, all other options either misinterpret the concept or present incorrect information regarding beneficiary rights and designations. Understanding these distinctions is crucial for effective estate planning and beneficiary management.