Under California Insurance Code Section 10113.72, an applicant for an individual life insurance policy must be given the right to designate:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Section 10113.72 requires that no individual life policy be issued until the applicant has been given the right to designate at least one person, in addition to the applicant, to receive notice of lapse or termination for nonpayment of premium. The insurer must supply a form for the designation and notify the policy owner annually of the right to change it. Before a policy can lapse, the insurer must give the policy owner and the designee at least 30 days' notice of the pending lapse, sent by first-class mail within 30 days after a premium becomes due and unpaid. The provision is a consumer-protection notice rule, not a beneficiary or ownership mechanism.
Why the other options are wrong
- B) A contingent beneficiary is the person who would receive death proceeds if the primary beneficiary predeceases the insured. That is a proceeds-recipient concept, whereas Section 10113.72 concerns a notice designee who is to be warned about a pending lapse or termination for nonpayment of premium.
- C) Section 10113.72 provides no mechanism for naming a successor policyowner in the event of incapacity. Ownership succession, such as through a durable power of attorney or trust, is arranged separately and is not part of the lapse-notice designation this section requires.
- D) Trust arrangements for minors are created through trust documents and funded by naming the trust as the policy beneficiary. The Section 10113.72 designation is limited to notice of lapse or termination and has nothing to do with the disposition of proceeds at death.
Memory hook
10113.72 = pick a friend to get the 'pay up or lapse' warning too.