New Jersey Life Producer Law Practice Test

Under what conditions can an insurer pay the proceeds of a life insurance policy to a minor beneficiary?

1. If a legal guardian has been appointed

2. If the minor is at least 18 years old

3. If a will is on file

4. Only in cases of emergency

The correct answer is: If a legal guardian has been appointed

An insurer can pay the proceeds of a life insurance policy to a minor beneficiary if a legal guardian has been appointed. This ensures that there is a responsible adult in place to manage the funds on behalf of the minor, as minors are generally unable to enter into contracts or manage large sums of money. The legal guardian acts in the best interest of the minor, ensuring that the proceeds are used appropriately. In New Jersey, insurance policies often contain provisions regarding how benefits are distributed when the beneficiary is underage. Without a legal guardian, insurers typically will not distribute funds directly to a minor to protect the interests of the child and to comply with legal standards. Having a designated legal guardian essentially provides a framework within which the insurance proceeds can be appropriately managed until the minor reaches adulthood.