Which of the following is a characteristic of a life insurance policy?

A life insurance policy is indeed a type of contract that can designate various beneficiaries. This characteristic is essential as it allows the policyholder to choose who will receive the death benefit upon their passing. Beneficiaries can be individuals, such as family members, or entities, such as charities or trusts. The flexibility in naming multiple beneficiaries ensures that the policyholder can dictate how the benefits are distributed according to their needs and wishes.

This capacity to have various beneficiaries also adds a layer of planning for the policyholder, enabling them to provide financial support to different loved ones or causes after their death. It demonstrates the role of life insurance not just as a financial safety net but also as an integral part of estate planning.

The other statements lack the same level of accuracy regarding the nature of life insurance policies: a life insurance policy is a binding contract (not non-binding), payouts are not guaranteed regardless of health (as underwriting involves health assessments), and it typically provides coverage for various causes of death, not just accidents. Thus, the requirement that a life insurance policy encompasses multiple beneficiaries supports its function as a versatile financial tool in personal and family planning.