California Life-Only & Accident and Health AgentLife InsuranceEasy
A life insurance policy states that if the insured dies, the death benefit will first be paid to his spouse. If the spouse is not alive, it will then be paid to his two children equally. If none of them are alive, it will go to his estate. What classification applies to the spouse in this beneficiary designation?
- ATertiary Beneficiary
- BPrimary Beneficiary
- CContingent Beneficiary
- DIrrevocable Beneficiary
Show answer & explanationAnswer & explanation
Correct answer: B. Primary Beneficiary
The primary beneficiary is the first person or entity designated to receive the death benefit upon the insured's passing. In this scenario, the spouse is the first in line to receive the proceeds.
Why the other options are wrong
- A. Tertiary beneficiaries receive the death benefit only if both primary and contingent beneficiaries are not alive.
- C. Contingent beneficiaries receive the death benefit only if the primary beneficiary is not alive.
- D. An Irrevocable Beneficiary cannot be changed by the policyowner without their consent, which is a different concept than order of succession.
Primary Beneficiary
The person or entity who has the first right to receive the death benefit from a life insurance policy upon the insured's death.
- First in line to receive policy proceeds.
- Must be alive at the time of the insured's death to receive benefits.
- Policyowner can typically change the primary beneficiary unless it's designated as irrevocable.
Memory trick: Primary, Contingent, Tertiary: The order of who gets paid.