Given Bethenny’s situation, who should she name as a beneficiary on her policy?

Bethenny meets with Harrison, an insurance agent, to review her life insurance needs. Bethenny is a single mother of a 3-year-old daughter named Emma. Bethenny’s main concern is that Emma is taken care of financially if Bethenny were to die prematurely. Emma’s father Steve suffers from chronic alcoholism and is homeless. He has not been present in Emma’s day-to-day life. After careful analysis, Harrison suggests that Bethenny purchase a $250,000 20-year term insurance policy.

Given Bethenny’s situation, who should she name as a beneficiary on her policy?
A . Her estate.
B . Emma.
C . A trustee.
D . Steve.

View Answer

Answer: C

Explanation:

Since Emma is a minor, naming her directly as a beneficiary would complicate access to funds until she reaches the age of majority. Additionally, Steve, given his circumstances, would not be a suitable option. Instead, naming a trustee for Emma’s benefit would ensure that the funds are managed responsibly until she is of legal age to handle the inheritance. This setup aligns with Bethenny’s intention to provide financial security for Emma, allowing a trusted adult to manage the funds in Emma’s best interests.