Question 60

In most cases, insurers require that a guardian be appointed in the beneficiary clause of the policy or that a guardian be designated in the will.

Insurers typically mandate that a guardian be assigned for minor beneficiaries to ensure that the death benefit proceeds are managed appropriately until the minor reaches adulthood.

A) If the insured had outstanding debts, the minor beneficiary is responsible for repaying the debts with the death benefit proceeds.

This statement is incorrect. Minor beneficiaries are not legally responsible for the debts of the deceased. The death benefit proceeds are intended for the minor's benefit and cannot be used to settle the insured's outstanding debts.

B) In most cases, insurers require that a guardian be appointed in the beneficiary clause of the policy or that a guardian be designated in the will.

This statement is correct. Insurance companies often require a guardian to be appointed to manage the funds on behalf of a minor beneficiary, ensuring that the proceeds are held in trust until the minor is of age to receive them directly.

C) If a minor is the primary beneficiary, the minor has a right to receive the death benefit immediately.

This statement is incorrect. A minor cannot directly receive the death benefit; it must be managed by a guardian or held in trust until the minor reaches the legal age of majority.

D) Minor beneficiaries are also referred to as tertiary beneficiaries.

This statement is incorrect. Minor beneficiaries are not classified as tertiary beneficiaries; they are typically classified as primary or secondary beneficiaries, depending on their designation in the policy.

Conclusion

Option B is the only correct statement, as it accurately reflects the necessity of appointing a guardian for minor beneficiaries in insurance policies. The other options fail because they misrepresent the legal responsibilities and classifications of minor beneficiaries, highlighting the importance of proper guardianship in managing death benefits for minors.