Will wants to buy a new car.He goes to the bank to get a loan for the purchase, and signs an agreement to pay $10.00 per month in premiums on a term life insurance policy which names the bank as the recipient of the policy proceeds in the event of his death before the loan is repaid.The bank is a(n):
A)incidental beneficiary.
B)creditor beneficiary.
C)donee beneficiary.
D)assignee.

Question

Quizplus · Accepted Answer

The bank is a creditor beneficiary because it is named as the recipient of the insurance proceeds in the event that Will dies before the loan is repaid. As the lender of the money, the bank has a vested interest in ensuring that the loan is repaid, and the life insurance policy provides additional security for the repayment of the loan.

Will Wants to Buy a New Car