Question

Which of the following best describes a contingent beneficiary?

a) The first person entitled to receive the death benefit
b) The person who is responsible for managing the policy
c) The beneficiary who can only receive the benefit under certain conditions
d) The primary beneficiary

Answer 1

A contingent beneficiary is the beneficiary who can only receive the benefit under certain conditions. For example, if the primary beneficiary predeceases the policyholder, the contingent beneficiary would receive the benefit.

Step-by-step explanation:

A contingent beneficiary is the beneficiary who can only receive the benefit under certain conditions.

For example, let's say John has a life insurance policy and he names his wife Jane as the primary beneficiary. However, John also wants to ensure that if Jane were to predecease him, his children would receive the benefit. Therefore, John names his children as contingent beneficiaries. In this scenario, the contingent beneficiaries would only receive the death benefit if Jane were to pass away before John.