Minnesota Life Insurance License Practice Exam

How is the death benefit distributed if multiple beneficiaries are designated?

1. Equally among all beneficiaries

2. According to specified percentages

3. To only the primary beneficiary

4. Only to the insured's estate

The correct answer is: According to specified percentages

The distribution of the death benefit when multiple beneficiaries are designated is typically handled according to specified percentages. This means that the policyholder can designate how much each primary or contingent beneficiary will receive from the total death benefit, allowing for a tailored approach that reflects their wishes. This method provides flexibility and ensures that the insurance proceeds can be allocated in a way that aligns with the policyholder's financial plan or family dynamics. For instance, a parent may choose to designate specific percentages to children based on their needs or circumstances, rather than an equal split. This contrasts with equal distribution, where all beneficiaries receive the same amount, and might not suit every situation. Choosing only the primary beneficiary would exclude others, thus failing to honor the policyholder's intention to provide for multiple individuals. Additionally, distributing the funds solely to the insured's estate would divert the benefit away from named individuals and into the estate settlement process, which may incur additional costs and delays.