When does the contingent beneficiary receive the death benefit?

When does the contingent beneficiary receive the death benefit?

• A. Only if the primary beneficiary predeceases the insured or is no longer alive.
• B. If the insured dies, regardless of the primary beneficiary.
• C. Only if the policy lapses.
• D. If the insured outlives the primary beneficiary by more than 10 years.

Answer: (C)

The idea behind a contingent beneficiary is that they’re the backup rider to the primary recipient. They only receive the death benefit if the primary beneficiary cannot receive it—typically because the primary predeceased the insured or is not alive when the insured dies. If the policy lapses, there’s no death benefit to pay at all, so the contingent would not receive anything in that scenario. So the payout depends on the primary not being able to receive it at the time of the insured’s death, not on the policy simply lapsing or on an arbitrary time gap.

The idea behind a contingent beneficiary is that they’re the backup rider to the primary recipient. They only receive the death benefit if the primary beneficiary cannot receive it—typically because the primary predeceased the insured or is not alive when the insured dies. If the policy lapses, there’s no death benefit to pay at all, so the contingent would not receive anything in that scenario. So the payout depends on the primary not being able to receive it at the time of the insured’s death, not on the policy simply lapsing or on an arbitrary time gap.