Difficulty: Medium

Average Score: 74%

Which of the following is an example of a beneficiary designation by class?

Rationale

All children of the insured.

This choice exemplifies a beneficiary designation by class, as it groups all children together as a collective beneficiary rather than naming individuals specifically. This type of designation allows for flexibility and ensures that any future children of the insured will also be beneficiaries without the need for further updates to the will or policy.

A (All children of the insured) CORRECT

This option identifies a class of beneficiaries rather than specific individuals. By designating "all children," the insured ensures that any child, regardless of when they are born, will automatically receive their share of the benefits, illustrating the essence of a class designation.

B (A specified parent of the insured) YOUR ANSWER

This choice represents a specific individual rather than a class. By naming a particular parent, it excludes the possibility of other parents or guardians being beneficiaries. Therefore, it does not meet the criteria for a beneficiary designation by class, which requires a broader grouping.

C (A named shareholder of a corporation) YOUR ANSWER

Similar to option B, this choice refers to a specific individual, namely a shareholder. This designation does not encompass a group or class of individuals, thereby disqualifying it from being an example of a class designation. It specifically identifies one person rather than a broader category.

D (The estate of the insured) YOUR ANSWER

This option pertains to the insured's estate, which is not a class designation but rather a specific entity that will receive benefits upon the insured's death. While it represents a legal entity, it does not classify individuals in a manner that would allow for multiple beneficiaries within a defined group.

Conclusion

Beneficiary designations by class group multiple individuals under a common category, ensuring inclusivity for future additions to that category. "All children of the insured" is the only option that effectively embodies this principle, allowing for automatic inclusion of all children without needing to revise the designation. In contrast, the other options specify individuals or entities, thereby failing to represent a class designation.

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