Question

A life insurance policy's contingent beneficiary is the

a) primary person who receives the death benefits if the insured dies
b) person who receives the death benefits if the primary beneficiary dies before the insured
c) person who receives the death benefits if there is no named beneficiary
d) person whose approval is needed before a beneficiary designation is changed

Answer 1

A contingent beneficiary in a life insurance policy is a person named to receive benefits if the primary beneficiary predeceases the insured, serving as a safeguard for the intended distribution of the death benefits.

Step-by-step explanation:

The contingent beneficiary in a life insurance policy is the person who receives the death benefits if the primary beneficiary dies before the insured. Essentially, the contingent beneficiary is a backup to the primary beneficiary, ensuring that the insured's wishes are honored and that the death benefit is paid out as intended. Life insurance policies serve to provide financial protection and assistance to survivors by distributing the death benefit and leveraging the accumulated cash value for loans with the need to pay back with interest.