Difficulty: Medium

Average Score: 50%

When beneficiaries are designated 'per capita' in a life insurance policy, it means

Rationale

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 signifies that the remaining beneficiaries will equally divide the death benefits, regardless of any heirs of beneficiaries who may have passed away. This ensures that each surviving beneficiary receives an equal share of the policy proceeds, regardless of the original beneficiary's heirs.

A (the policyowner cannot revoke the class designation.) YOUR ANSWER

This statement is incorrect. The ability to revoke the class designation is not related to whether beneficiaries are designated 'per capita' or not. The revocation of the class designation is a separate aspect governed by the terms of the policy and the rights of the policyowner.

B (surviving beneficiaries must divide their share of the death benefits among any heirs of beneficiaries who predecease the insured.) YOUR ANSWER

This option is incorrect. In a 'per capita' designation, the death benefits are not divided among the heirs of beneficiaries who predecease the insured. Instead, the surviving beneficiaries evenly split the benefits among themselves, regardless of any heirs.

C (the policyowner cannot designate minor children as beneficiaries.) YOUR ANSWER

This choice is incorrect. The ability to designate minor children as beneficiaries is not restricted by the 'per capita' designation in a life insurance policy. The policyowner retains the freedom to choose beneficiaries, including minor children, regardless of the beneficiary designation type.

Conclusion

In a 'per capita' designation within a life insurance policy, surviving beneficiaries are entitled to share the death benefits equally, irrespective of any heirs of beneficiaries who may have passed away before the insured. This allocation method ensures fairness among the surviving beneficiaries and simplifies the distribution process by dividing the benefits equally among them.

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