Life License Qualification Program (LLQP) Practice Exam

What term is used for a secondary beneficiary who will receive proceeds only if the primary beneficiary is deceased?

1. Contingent

2. Revocable

3. Primary

4. Tertiary

The correct answer is: Contingent

The term used for a secondary beneficiary who will receive proceeds only if the primary beneficiary is deceased is "contingent." This classification is important in the context of insurance and estate planning, as it defines the order in which beneficiaries receive benefits from a policy or estate. A contingent beneficiary acts as a backup, ensuring that if something happens to the primary beneficiary—for instance, their passing—there is an alternative individual designated to receive the benefits. This structure helps to ensure that the assets are distributed according to the policyholder's wishes, even in unforeseen circumstances. A revocable beneficiary can be changed by the policyholder during their lifetime, while a primary beneficiary is the first in line to receive the benefits upon the policyholder's death. The term "tertiary" refers to a third level of beneficiaries, who would receive benefits only if both the primary and contingent beneficiaries are unable to. Understanding these distinctions is essential for effective beneficiary designation and planning.