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 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 benefits from the term life insurance policy taken out by Will, as it will receive the policy proceeds if Will dies before repaying the loan, ensuring the loan is paid off.

Will Wants to Buy a New Car