Minnesota Life Insurance License Practice Exam

In life insurance, what is the term for the person who receives the death benefit?

1. Proposer

2. Beneficiary

3. Policyholder

4. Insured

The correct answer is: Beneficiary

The person who receives the death benefit in a life insurance policy is known as the beneficiary. This is a crucial role in the life insurance arrangement, as the beneficiary is the individual or entity designated by the policyholder to receive the financial payout in the event of the insured's death. In life insurance terminology, the beneficiary can be a person, a group of people, or even an organization, such as a charity. This designation is vital because it ensures that the proceeds of the policy are directed to someone who relies on the insured for financial support or who shares in their financial legacy. Other terms present in the choices have distinct meanings. The proposer refers to the person who applies for the insurance policy, typically the one who pays the premiums and manages the policy, but they may not be the recipient of the death benefit. The policyholder is the individual or entity that owns the insurance policy, which could be the same as the proposer but is not always the beneficiary. The insured is the individual whose life is covered by the policy, but they do not necessarily receive the death benefit; rather, the benefit goes to the chosen beneficiary after the insured's passing. Thus, the term beneficiary specifically identifies the recipient of the death benefit, making it the correct answer