Massachusetts Life Producer Practice Exam

Which of the following statements best describes a "beneficiary" in a life insurance policy?

1. A person who pays the policy premiums

2. The insurance company that underwrites the policy

3. The individual who receives the death benefit

4. A representative of the policyholder

The correct answer is: The individual who receives the death benefit

A beneficiary in a life insurance policy is the individual designated to receive the death benefit from the insurer upon the passing of the insured person. This definition underscores the key role beneficiaries play in life insurance; they are the ones who financially benefit from the policy when the insured individual dies. Understanding who the beneficiary is fundamental to grasping how life insurance policies function. The policyholder can choose anyone to be a beneficiary, and this can be a family member, friend, or even an entity like a charity. This designation is important as it ensures that the policy proceeds go to the intended recipient(s) and helps provide financial security to those chosen. In contrast, the other options describe different roles or entities associated with a life insurance policy. The individual who pays the premiums is not necessarily the beneficiary; they could be different people. The insurance company does not receive the death benefit; instead, it is responsible for paying out the benefit to the beneficiary. Lastly, while a representative of the policyholder may assist with policy management, they do not directly receive the death benefit unless named as the beneficiary. Understanding these distinctions clarifies the specific function of a beneficiary within the context of a life insurance policy.