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 the life insurance policy is intended to benefit the bank by ensuring the loan is repaid if Will dies before paying it off.

Will Wants to Buy a New Car