South Carolina Life Insurance Practice Exam

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

1. Insured

2. Underwriter

3. Beneficiary

4. Policyholder

The correct answer is: Beneficiary

In life insurance, the individual who receives the death benefit upon the death of the insured is referred to as the beneficiary. This term specifically identifies the person or entity designated in the policy to receive the funds, ensuring that the intent of the policyholder is honored when the insured passes away. The beneficiary can be a person, a trust, a charity, or any other entity specified by the policyholder, and the designation can usually be amended as needed while the policyholder is alive. Understanding this term is crucial, as it delineates who has the legal right to claim the benefits from the life insurance policy after the insured's death, reflecting the essence of how life insurance serves as a financial protection mechanism for dependents or beneficiaries. The roles of the insured, underwriter, and policyholder, while integral to the structure of life insurance, do not directly pertain to the receipt of the death benefit in the same manner that the beneficiary does.