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4.5.3 Charities

We've all heard stories about someone who names his church or favorite charity as beneficiary in their will. The problem with that is a will can be contested. Family relatives may feel that "Uncle Charlie" really didn't know what he was doing or that he always meant to change it, or some other reason can be put forth. A life insurance policy cannot be contested. So if Uncle Charlie named a nonprofit organization as beneficiary in his life insurance policy, the estate will not inherit the funds and the organization would get the proceeds regardless of the will.

1

Section 4.5 Review

When a business is named as beneficiary, this type of transaction is referred to as a:

a) single party policy.
b) unilateral policy.
c) third-party policy.
d) class policy.
CORRECTTRY AGAIN (Lesson 4.5)
Check your answer

2

When a trust is the named beneficiary, the fiduciary responsibility lies with the:

a) estate.
b) IRS.
c) trustee.
d) policyowner.
CORRECTTRY AGAIN (Lesson 4.5.1)
Check your answer

3

If a policyowner fails to designate a beneficiary, the proceeds of the policy go to the insured's estate where they are no longer protected from creditors.

a) True
b) False
CORRECTTRY AGAIN (Lesson 4.5.2)
Check your answer