A policyholder wants to ensure that the proceeds of their life insurance policy are distributed according to their wishes, specifically guaranteeing that a minor child receives funds only upon reaching the age of majority. Which of the following beneficiary designations would best accomplish this goal in Canada?

Question: A policyholder wants to ensure that the proceeds of their life insurance policy are distributed according to their wishes, specifically guaranteeing that a minor child receives funds only upon reaching the age of majority. Which of the following beneficiary designations would best accomplish this goal in Canada?

Answer options:

• Naming the child directly as an irrevocable beneficiary. ✅ Naming a testamentary trust as the beneficiary, with the child as the trust's sole beneficiary.
• Naming the policyholder's estate as the beneficiary, with instructions in the will for the child.
• Naming the child directly as a revocable beneficiary, with a guardian appointed in the will.

Correct answer: Naming a testamentary trust as the beneficiary, with the child as the trust's sole beneficiary.

Explanation: Naming a testamentary trust as the beneficiary allows the policyholder to establish specific conditions for the distribution of funds to a minor, as the trustee will hold the funds until the child reaches the specified age, providing control beyond a direct designation. This avoids potential issues with payment to minors and ensures proper management.