Minnesota Life Insurance License Practice Exam

If both the insured and the primary beneficiary are killed in the same accident, who will receive the death benefit?

1. Primary beneficiary

2. Contingent beneficiary

3. Insured's estate

4. Named heirs

The correct answer is: Contingent beneficiary

In the scenario where both the insured and the primary beneficiary are killed in the same accident, the death benefit typically goes to the contingent beneficiary. A contingent beneficiary is designated to receive the policy's death benefit if the primary beneficiary is unable to do so, which in this case occurs because the primary beneficiary has also died. The rationale behind this arrangement is based on the principle of ensuring that the death benefit is paid to someone other than the insured, as that person is now unable to fulfill their role as the primary beneficiary. In the absence of a contingent beneficiary, the death benefit would then go to the insured's estate, which would be managed according to probate laws and distributed among the heirs. This could lead to delays, additional complexity, and potentially higher taxes or court costs, which is why policies often include the option of a contingent beneficiary to streamline the process. Other designations such as the insured's estate or named heirs would typically only be considered if no beneficiary, such as a primary or contingent beneficiary, exists, or if the decision making around the estate involves legal processes.