Life License Qualification Program (LLQP) Practice Exam

Under what condition would a contingent beneficiary receive the policy proceeds?

1. If the primary beneficiary is a minor at the time of the insured's death

2. If the primary beneficiary dies before the insured

3. If the insured died of accidental causes

4. If the insured died of natural causes

The correct answer is: If the primary beneficiary dies before the insured

A contingent beneficiary is designated to receive the policy proceeds if the primary beneficiary cannot or does not receive them. The scenario where the primary beneficiary dies before the insured is a clear condition that necessitates the contingent beneficiary to step in and receive the death benefits under the policy. In this case, because the primary beneficiary has passed away prior to the insured's death, they are no longer eligible to claim the benefits. Therefore, the contingent beneficiary would be the next in line to receive the proceeds as stipulated in the insurance policy. In contrast, the other options do not fulfill the necessary condition for the contingent beneficiary to receive the policy proceeds. For instance, if the primary beneficiary is a minor, this would typically prevent them from directly receiving the benefits until they reach adulthood, but the proceeds would usually be held in trust or managed by a guardian until the minor is of legal age. The cause of the insured's death, whether it is accidental or natural, does not impact the contingent beneficiary's eligibility because the primary beneficiary's status is what ultimately determines who receives the proceeds if they are unable to do so.