Which of the following describes the purpose of naming a beneficiary for a life insurance policy?

Question: Which of the following describes the purpose of naming a beneficiary for a life insurance policy?

Answer options: ✅ To ensure the policy proceeds are paid directly to the designated individual(s) without passing through the deceased's estate.

• To allow the policy proceeds to be distributed according to the deceased's will.
• To provide a tax deduction for the policyowner during their lifetime.
• To prevent creditors from making claims against the policy's cash value.

Correct answer: To ensure the policy proceeds are paid directly to the designated individual(s) without passing through the deceased's estate.

Explanation: Naming a beneficiary ensures that the death benefit bypasses the estate, allowing for a quicker distribution of funds to the intended person(s) and potentially protecting the proceeds from estate creditors, as outlined in provincial insurance acts. This differs from proceeds flowing through the will, which would be part of the estate.