Who is considered a beneficiary in a life insurance policy?

Who is considered a beneficiary in a life insurance policy?

• A. Person who pays the premiums
• B. Individual or entity designated to receive the death benefit
• C. Insurance agent who sells the policy
• D. Company that underwrites the insurance

Answer: (B)

In a life insurance policy, a beneficiary is the individual or entity designated to receive the death benefit upon the death of the insured policyholder. This designation is crucial because it ensures that the intended party receives the financial support meant to assist them in the event of the policyholder’s passing. Beneficiaries can be family members, friends, charities, or even trusts, reflecting the policyholder's wishes regarding who should benefit from the policy. The other roles listed, while important in the context of a life insurance policy, do not fit the definition of a beneficiary. The person who pays the premiums is responsible for maintaining the policy but does not automatically receive the death benefit unless they are also named as the beneficiary. An insurance agent facilitates the sale of the policy and provides guidance, but they do not receive benefits from the policy themselves unless designated. Lastly, the company that underwrites the insurance is responsible for managing and assuming the risk associated with the policy but does not benefit financially from the death benefit; instead, they pay it out to the designated beneficiary.

In a life insurance policy, a beneficiary is the individual or entity designated to receive the death benefit upon the death of the insured policyholder. This designation is crucial because it ensures that the intended party receives the financial support meant to assist them in the event of the policyholder’s passing. Beneficiaries can be family members, friends, charities, or even trusts, reflecting the policyholder's wishes regarding who should benefit from the policy.

The other roles listed, while important in the context of a life insurance policy, do not fit the definition of a beneficiary. The person who pays the premiums is responsible for maintaining the policy but does not automatically receive the death benefit unless they are also named as the beneficiary. An insurance agent facilitates the sale of the policy and provides guidance, but they do not receive benefits from the policy themselves unless designated. Lastly, the company that underwrites the insurance is responsible for managing and assuming the risk associated with the policy but does not benefit financially from the death benefit; instead, they pay it out to the designated beneficiary.