Test your knowledge on life insurance beneficiaries. Learn about designations, contingencies, and advantages of different beneficiary choices in this insurance quiz.
Who can be named as a beneficiary on a life insurance policy?
Only immediate family members
Anyone the policyholder chooses
Only spouses
Only children
#2
What is the primary purpose of a beneficiary designation?
To specify how the policy proceeds should be distributed
To appoint a guardian for minor children
To name the executor of the policy
To designate the funeral arrangements
#3
What happens if a life insurance policyholder doesn't designate a beneficiary?
The policy becomes null and void
The insurance company designates a beneficiary
The policy proceeds go to the state
The proceeds go to the estate and are subject to probate
#4
Can a life insurance beneficiary designation override a will?
Yes, beneficiary designations always override a will
No, the will always takes precedence
It depends on state laws
It depends on the insurance company's policies
#5
What is a contingent beneficiary?
A beneficiary who receives double the payout
A beneficiary who receives the policy proceeds if the primary beneficiary is deceased
A beneficiary who is not eligible for any payout
A beneficiary who must be a close family member
#6
What happens if a beneficiary predeceases the policyholder?
The proceeds go to the insurance company
The proceeds are distributed among the remaining beneficiaries
The policy becomes null and void
The proceeds go to the policyholder's estate
#7
Can a minor be named as a beneficiary?
Yes, but only if a legal guardian is appointed
No, minors cannot be named as beneficiaries
Yes, there are no restrictions on naming minors as beneficiaries
Yes, but only if they are over the age of 16
#8
What is the advantage of naming multiple beneficiaries?
It ensures that the proceeds are evenly distributed among family members
It allows for flexibility in case a beneficiary predeceases the policyholder
It reduces the overall payout of the policy
It increases the tax liability on the policy
#9
What is the advantage of naming a trust as the beneficiary of a life insurance policy?
It avoids probate and provides more control over how the proceeds are distributed
It increases the insurance premiums
It reduces the tax benefits
It delays the payout to beneficiaries
#10
What is the 'revocable' designation in beneficiary designations?
The beneficiary designation cannot be changed
The beneficiary designation can be changed without consent from the previous beneficiary
The beneficiary designation can only be changed with approval from a court
The beneficiary designation can only be changed by the insurance company
#11
Can a life insurance policyholder designate their business as a beneficiary?
Yes, but only if the business is a sole proprietorship
Yes, but only with the approval of all business partners
No, a business cannot be named as a beneficiary
Yes, but only if the policyholder is a major shareholder
#12
In what circumstances might a policyholder want to change their beneficiary designation?
Upon marriage or divorce
After the birth or adoption of a child
Following the death of a beneficiary
All of the above
#13
What is the difference between a revocable and irrevocable beneficiary designation?
Revocable designation can be changed by the policyholder at any time, while irrevocable designation cannot be changed without the consent of the beneficiary
Revocable designation cannot be changed, while irrevocable designation can be changed by the policyholder at any time
Both revocable and irrevocable designations can be changed at any time
Both revocable and irrevocable designations cannot be changed once set
#14
What is a per stirpes beneficiary designation?
The proceeds are distributed equally among all named beneficiaries
The proceeds are distributed according to the shares of the deceased beneficiary's descendants
The proceeds are distributed to the closest living relative of the deceased beneficiary
The proceeds are distributed based on the policyholder's estate plan