Minnesota Life Insurance License Practice Exam

In life insurance, what does the term "beneficiary" refer to?

1. The person who buys the policy

2. The person who receives the death benefit

3. The insurance agent selling the policy

4. The insurance company paying the benefit

The correct answer is: The person who receives the death benefit

The term "beneficiary" in life insurance specifically refers to the individual or entity designated to receive the death benefit upon the policyholder's passing. This designation is a critical aspect of the life insurance contract, as it ensures that the proceeds are directed to the appropriate person or organization, providing financial support or fulfillment of obligations after the insured's death. When a policyholder purchases a life insurance policy, they have the authority to name beneficiaries, which can be family members, friends, or even charities. The beneficiary's role is integral to the purpose of life insurance, which is to provide financial security to loved ones after death, making it essential for policyholders to choose their beneficiaries carefully and to keep that information up to date. The other options represent different roles in the life insurance process but do not define the beneficiary. The person who buys the policy, often called the policyholder, is responsible for making payments and managing the policy, whereas the insurance agent facilitates the sale and advises on coverage but does not receive benefits. The insurance company, on the other hand, is responsible for underwriting the policy and paying out the benefits but does not serve as the beneficiary. Overall, understanding the role of the beneficiary in life insurance is crucial for effective financial planning and ensuring that