Case I – O’Neil Case

Any of irrelevant information to the question below, you can ignore from the description. This case will be updated and continued to the Second Case Study at the final.

Fiona and George O’Neil have been married twenty-seven years and have three children ages 6, 8, and 12. The O’Neils think of themselves as a middle-class to above-average-income family with typical educations for the three children. It is assumed that all three will go to the state university, where tuition and other costs will be somewhat less than for a private college and university.

Both Fiona and George are employed, but by different employers. Each spouse had a gross income of approximately $45,000 last year. They are each covered by a group term life insurance policy for the amount of their annual income. Each spouse has designated the other spouse irrevocably as the primary beneficiaries, and the three children are designated irrevocably as contingent beneficiaries.

In addition to the group term life insurance coverage, Fiona has a $60,000 universal life policy on her life, and George has an $75,000 ordinary whole life policy on his life. The two policies have the same beneficiary designations as the group term life insurance coverages.

Question. In which of following ways would the rights of Fiona and George, as primary beneficiaries of the various life insurance policies, differ from the right s of their children, who are designated as contingent beneficiaries? Select all correct answer(s).

(1) If a primary lump-sum beneficiary is living when an insured dies, the contingent beneficiary has no legal right to any of the life insurance lump-sum death proceeds.

(2) Generally, the only circumstances under which a contingent beneficiary would have any legal right to the lump-sum death proceeds would be if the primary beneficiary predeceases the insured.

(3) If the primary beneficiary receives the policy’s death proceeds but dies before withdrawing any of the death proceeds, the contingent beneficiary would receive the death proceeds.