When an individual life insurance policy is issued in California, the applicant must be given the right to:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
CIC §10113.72 requires that an individual life insurance policy not be issued or delivered in California until the applicant has been given the right to designate at least one person, in addition to the applicant, who will receive notice of lapse or termination of the policy for nonpayment of premium. The insurer must provide a designation form, notify the policyowner annually of the right to change the designation, and give at least 30 days' notice before lapse or termination to both the owner and the designee under CIC §10113.71(b). The purpose is to prevent unintended loss of coverage.
Why the other options are wrong
- An insurer may not cancel without notice; California law requires advance notice of lapse or termination, which is exactly the reason the designee right exists. This option therefore does not match the facts presented in the question and is not the correct answer to select.
- Naming an irrevocable beneficiary is a policyowner option, but it is unrelated to the lapse-notice designee right that must be offered at policy issuance. This answer describes a different situation from the one in the question and is therefore incorrect under the facts given here.
- There is no right to convert an individual policy into a group policy; conversion rights apply to group coverage when the group policy terminates. This choice does not fit the arrangement described in the question, so it is clearly not the right option to choose.
Memory hook
Name a backup to receive the lapse alert 30 days before coverage dies.