Texas General Lines — Life, Accident, Health and HMOGeneral InsuranceMedium
A life insurance policy specifies that the primary beneficiary will receive the death benefit, but if the primary beneficiary predeceases the insured, another named individual will receive the proceeds. The second named individual is known as the:
- AIrrevocable Beneficiary
- BTrustee Beneficiary
- CContingent Beneficiary
- DTertiary Beneficiary
Show answer & explanationAnswer & explanation
Correct answer: C. Contingent Beneficiary
A contingent beneficiary is designated to receive the policy proceeds if the primary beneficiary dies before the insured. They are secondary in line to receive the benefits.
Why the other options are wrong
- A. An irrevocable beneficiary cannot be changed without their written consent, which is a different concept than being secondary.
- B. A trustee beneficiary implies a trust is established, where the trustee manages funds for another, which is a method of payout, not a hierarchical designation.
- D. A tertiary beneficiary would be third in line, after both primary and contingent beneficiaries, which is not the scenario described.
Contingent Beneficiary
A contingent beneficiary is the person or entity designated to receive the life insurance policy proceeds if the primary beneficiary dies before the insured.
- Secondary beneficiary
- Receives benefits only if primary beneficiary cannot
- Important for estate planning
- Can be multiple contingent beneficiaries
Memory trick: Contingent: They're 'Counting' on being next in line.