South Carolina Life Insurance Practice Exam

Which type of beneficiary can receive policy proceeds regardless of the relationship to the insured?

1. Primary Beneficiary

2. Contingent Beneficiary

3. Irrevocable Beneficiary

4. Named Beneficiary

The correct answer is: Named Beneficiary

A named beneficiary is a specific individual or entity designated in a life insurance policy to receive the death benefit when the insured passes away. This designation does not depend on the relationship of the beneficiary to the insured; it can be anyone the policyholder chooses, such as a family member, friend, or even an organization. Being able to choose any individual or entity gives the policyholder flexibility in deciding who will benefit from the policy. This designation is formally specified in the policy documents, and as long as the beneficiary is alive at the time of the insured's death, they will be entitled to receive the benefits. In contrast, primary beneficiaries are the first in line to receive benefits and can be related or unrelated to the insured, while contingent beneficiaries only receive benefits if the primary beneficiary cannot be located or is deceased. Irrevocable beneficiaries have a specific status that prevents the policyholder from changing the beneficiary without their consent. These distinctions clarify that the named beneficiary has the broadest eligibility criteria based solely on the policyholder's choice.