Question

John and Mary have a handicapped child that is financially dependent upon them. The death of one of the parents would not be financially disastrous, however the death of both likely would be. Which policy would be best suited for them?

a. payor protection policy
b. Family income policy
d. Second-to-die policy
e. First-to-die policy

Answer 1

The second-to-die policy is best for John and Mary since it pays out after both parents die, providing financial support for their dependent child.

Step-by-step explanation:

For John and Mary, who have a financially dependent handicapped child and are addressing the concern of both parents passing away, the second-to-die policy would be the best-suited option. This type of policy pays out the death benefit only after the second insured individual dies, providing financial support for dependents who survive both policyholders. While a payor protection policy generally provides for waiver of premiums if the policyholder becomes disabled or dies, and a family income policy combines whole life and term insurance to provide a death benefit as well as regular income, the second-to-die policy is specifically designed to serve the needs of couples wanting to leave a legacy or address estate planning concerns.