What is considered a valid reason for an insurer's refusal to pay death benefits directly to a minor?
Asked by: Ms. Maymie Mueller | Last update: July 9, 2025Score: 4.2/5 (67 votes)
What is considered a valid reason for an insurer's refusal to pay policy?
The policyholder stopped paying premiums
If the policyholder stopped paying their premiums, the insurance policy may lapse. In this situation, the insurer can cancel the policy and not pay the death benefit.
Under which circumstances may a minor receive proceeds from a death benefit?
Insurance companies will rarely pay life insurance proceeds directly to a minor. Typically, the court appoints a guardian — a potentially costly and time-consuming process — to handle the proceeds until the minor beneficiary reaches the age of majority according to state law.
Which of the following would not be a reason for purchasing life insurance on a child's life?
Explanation: In the context of life insurance, the option 'Provide benefits for the child if the parents die' would NOT be a reason for purchasing life insurance on a child's life.
Which statement is true regarding minor beneficiaries?
The correct statement concerning a minor beneficiary is that a guardian is typically required to be appointed in the beneficiary clause of a life insurance contract. Minors cannot manage significant assets themselves, necessitating the appointment of an adult to oversee the proceeds.
Don’t Name Minors as Beneficiaries on Life Insurance! Here’s Why…
What happens if I died and my beneficiary is a minor?
Most life insurance policies will not allow you to directly leave money to beneficiaries who are minors. If you name a minor as a beneficiary, they will have to settle the matter in probate court. In which an adult will be delegated to manage the money until the minor is old enough to be responsible for it themselves.
Which of the following beneficiaries will qualify as a designated beneficiary?
SECURE Act and Designated Beneficiaries
The account owner's surviving spouse. A child who is younger than 18 years of age. A disabled individual. A chronically ill individual.
What reasons will life insurance not pay?
- Nonpayment of Premiums.
- Death during the Contestability Period.
- Misrepresentation on Application.
- Employer Failed to Submit a Disability Waiver of Premium.
- Problems with the Beneficiary.
- Policy was included in a Trust or a Will.
- Denials Due to Suicide Exclusion.
Which of the following is not an important reason for a life insurance application?
Final answer: The statement 'the beneficiary must sign the application before the insurer will issue the policy' is not a necessary component or important reason for a life insurance application. The beneficiary isn't required to sign the application or even be aware of the policy.
What type of situations are excluded from receiving life insurance payments?
Life insurance covers death due to natural causes, illness, and accidents. However, the insurance company can deny paying out your death benefit in certain circumstances, such as if you lie on your application, engage in risky behaviors, or fail to pay your premiums.
When must a death benefit be paid?
Generally, a life insurance plan's death benefit will only be paid following a death. However, some policies may allow the insured person to draw from the death benefit while they're still alive if the person covered is dealing with a terminal illness or a catastrophic accident that requires expensive care.
What age does a child stop receiving death benefits?
The Social Security representative helping with your application will tell you what other documents you may need. Benefits stop when your child reaches age 18 unless that child is a student or has a disability.
What are the rules for beneficiaries of life insurance?
Your beneficiary can be a person, a charity, a trust, or your estate. Almost any person can be named as a beneficiary, although your state of residence or the provider of your benefits may restrict who you can name as a beneficiary. Make sure you research your state's laws before naming your beneficiary.
What voids life insurance payout?
Life insurance proceeds can be denied. Some denials are legitimate, like in case of policy lapses, material misrepresentations, or exclusions in the form of illegal activities or war. In other cases, bad-faith insurers use elaborate methods to reject claims so they do not have to pay the proceeds.
Which of the following is a reason for an insurance company to reject a claim?
Omissions or inaccuracies in your insurance application
The insurer can reject your claim if they have reason to believe you didn't take reasonable care to answer all the questions on the application truthfully and accurately. A common example is failure to disclose a pre-existing medical condition.
Why do insurance companies never pay out?
Life insurance may not pay out if the policy expires, premiums aren't paid, or there are false statements on the application. Other reasons include death from illegal activities, suicide, or homicide, with insurers investigating claims thoroughly.
What are 3 reasons that a person might not have health insurance coverage?
- I can't afford it.
- Process of transitioning between plans/enrolling.
- Lost Medicaid/Medical Assistance because of additional income.
- Do not know health insurance options.
- Waiting for coverage to start.
- Dropped for nonpayment of premium.
Which of the following would be a valid reason why a policy premium?
What would be a valid reason why a policy premium would be higher than the standard premium? The insured does not meet established underwriting requirements.
Why are you denied life insurance?
Their reasons could be anything from a serious medical condition (like heart disease) or poor results from your life insurance medical exam to nonmedical reasons like bankruptcy, a criminal record, a positive drug test or even a dangerous hobby—carriers are not fans of insuring base jumpers in squirrel suits.
Can I refuse life insurance benefits?
However, a person must contact the life insurance company and make it aware of their desire not to receive the proceeds. Some insurance companies may want to see a letter from the primary beneficiary, while others will request that the primary beneficiary fill out their own form.
Why would a life insurance company deny a beneficiary their benefits?
If the named beneficiary is no longer alive or cannot be found, or if there are grounds to exclude the named beneficiary from coverage (such as if they were responsible for the death of the insured), the insurance company might delay in paying out benefits until a proper beneficiary is legally identified.
What happens if I can't pay my life insurance anymore?
If you don't pay your premium, your policy may lapse. To reinstate a lapsed policy, you may have to pay past due premium with interest. If you had a loan against your cash value when the policy lapsed, you may have to pay any unpaid interest and reinstate the loan.
What overrides beneficiaries?
This means that an executor can override a beneficiary's wishes if those wishes contradict the expressed terms of the will, do not comply with applicable laws, and the executor acts in the best interest of the estate and its beneficiaries.
What is the 10 year rule?
For defined contribution plan participants, or IRA owners, who die after December 31, 2019, (with a delayed effective date for certain collectively bargained plans), the SECURE Act requires the entire balance of the participant's account be distributed within ten years.
Can beneficiaries be contested?
In order to challenge a beneficiary designation, the claimant must be able to prove that the designation does not accurately reflect the decedent's wishes.