Vermont Life and Health Practice Exam

A beneficiary designation by class means that a specific group of people is identified as beneficiaries rather than naming individuals directly. In this context, selecting "Children of the insured" as the correct answer illustrates this concept effectively. By specifying "children," the policyholder indicates that all children, regardless of number or other distinguishing factors, will share in the benefits equally. This approach simplifies the designation process, ensures that any future children are automatically included, and avoids the complexities that can arise when attempting to name each child individually.

In contrast, the other options do not embody a class designation. "Spouse of the insured" refers to a specific individual, rather than a group. "Parents of the insured" also represents particular individuals rather than a class, and "Business partners of the insured" similarly designates a specific relationship rather than a collective category. Thus, those selections do not fit the definition of a class designation in the same way that "Children of the insured" does.