Difficulty: Medium

Average Score: 74%

Which of the following MUST be TRUE in order for a minor to receive proceeds from a death benefit?

Rationale

The minor must have an appointed guardian.

In order for a minor to receive proceeds from a death benefit, it is legally required that a guardian be appointed to manage those funds on behalf of the minor. This ensures that the minor's financial interests are protected and that the proceeds are used appropriately until the minor reaches the age of majority.

A (The minor must be related to the insured.) YOUR ANSWER

While being related to the insured may be common, it is not a legal requirement for a minor to receive death benefits. A minor can be named as a beneficiary regardless of their relationship to the insured, as long as other legal stipulations are met, such as the appointment of a guardian.

B (The minor can only be named as a contingent beneficiary.) YOUR ANSWER

A minor can be named as either a primary or contingent beneficiary. The designation does not affect the requirement for the minor to have a guardian. Thus, this statement is not universally true and does not reflect the necessary conditions for receiving proceeds.

C (The minor must be at least 16 years old.) YOUR ANSWER

There is no specific age requirement for a minor to be a beneficiary of a death benefit. They can be named as beneficiaries regardless of their age, as long as a guardian is appointed to manage the funds. This statement incorrectly assumes an age threshold that does not exist in this context.

D (The minor must have an appointed guardian.) CORRECT

This statement is true. Minors cannot directly manage or control financial assets, including death benefits, until they reach the age of majority. Therefore, an appointed guardian is necessary to ensure the proceeds are handled correctly and legally.

Conclusion

For a minor to receive proceeds from a death benefit, it is essential that a guardian is appointed to manage those funds. Relationship to the insured, age, or designation as contingent beneficiary are not legal prerequisites. The guardian's role is critical in safeguarding the minor's financial interests until they are of age to manage their own affairs.

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