Life & Health Insurance Exam (National Portion)Life InsuranceMedium
A life insurance policyowner has designated their three children as beneficiaries, with each child to receive an equal share of the death benefit. This type of beneficiary designation is known as:
- APer Stirpes
- BPer Capita
- CIrrevocable
- DRevocable
Show answer & explanationAnswer & explanation
Correct answer: B. Per Capita
A 'per capita' designation means 'by the head,' or 'per person,' indicating that each named beneficiary who is alive at the time of the insured's death will receive an equal share of the death benefit. If one predeceases, their share is divided among the survivors.
Why the other options are wrong
- A. Per Stirpes means 'by the branch,' where the share of a deceased beneficiary passes to their heirs, not to the other named beneficiaries.
- C. Irrevocable refers to a beneficiary designation that cannot be changed without the beneficiary's consent.
- D. Revocable refers to whether the policyowner can change the beneficiary without their consent, not how the benefit is distributed.
Per Capita (Beneficiary Designation)
A method of distributing death benefits where each named beneficiary who is alive at the time of the insured's death receives an equal share.
- Means 'by the head' or 'per person'.
- If a beneficiary predeceases the insured, their share is divided among the surviving beneficiaries.
- Often considered the default if not otherwise specified.
Memory trick: Per CAPITA: Count the living HEADS and divide.