Which rule holds that the assignee who is first to give notice to the insurer has priority to the proceeds, provided they had no notice of a prior assignment?

• A. The American rule.
• B. The English rule.
• C. First in time without regard to notice.
• D. A fraud-based rule.

Answer: (A)

When multiple people claim the proceeds of a life insurance policy, which claimant has a right to be paid first depends on a rule about notice to the insurer. The rule described here says the assignee who first gives notice to the insurer wins priority, as long as that assignee didn’t know about any earlier assignment. This approach rewards prompt communication and lets the insurer base its payment decision on actual notice, reducing the chance of paying the same proceeds to conflicting claimants.

This is the option labeled here as the American rule in your study materials. It contrasts with the rule that would ignore notice and go strictly by which assignment came first in time, or with rules grounded in fraud concerns. Since the scenario hinges on who notified the insurer first, and who had no knowledge of prior assignments, the priority goes to the earliest notifier after proper notice.