Texas General Lines — Life, Accident, Health and HMOGeneral InsuranceEasy
A life insurance policy specifies that the primary beneficiary will receive the death benefit. If the primary beneficiary predeceases the insured, the death benefit will then go to a secondary designated individual. This secondary individual is known as the:
- APer stirpes beneficiary
- BIrrevocable beneficiary
- CContingent beneficiary
- DTertiary beneficiary
Show answer & explanationAnswer & explanation
Correct answer: C. Contingent beneficiary
A contingent beneficiary (also known as a secondary beneficiary) is designated to receive the death benefit if the primary beneficiary dies before the insured. This ensures that the policy proceeds are distributed according to the insured's wishes even if the primary beneficiary is unavailable.
Why the other options are wrong
- A. Per stirpes is a method of distribution (by representation), not a type of beneficiary.
- B. An irrevocable beneficiary cannot be changed without their written consent, which is a different concept.
- D. A tertiary beneficiary would be third in line; the question specifies the 'secondary designated individual'.
Contingent Beneficiary
The person or entity designated to receive the death benefit of a life insurance policy if the primary beneficiary is deceased at the time of the insured's death.
- Also called 'secondary beneficiary'.
- Receives proceeds only if primary beneficiary cannot.
- Ensures proceeds are paid without probate if primary is unavailable.
Memory trick: Contingent: If Plan A fails, Plan B.