Tennessee Insurance Practice Exam

What happens to the proceeds from Accidental Death and Dismemberment insurance if the primary beneficiary dies before the insured?

1. The proceeds will go to the secondary beneficiary

2. The proceeds will go to the insured's estate

3. The proceeds will be donated to charity

4. The proceeds will go to the contingent beneficiary

The correct answer is: The proceeds will go to the contingent beneficiary

In the context of Accidental Death and Dismemberment (AD&D) insurance, if the primary beneficiary passes away before the insured individual, the proceeds are typically payable to the contingent beneficiary. The contingent beneficiary is designated to receive the death benefit only if the primary beneficiary is unable to do so. The use of beneficiary designations is fundamental in ensuring that death benefits are distributed according to the insured's wishes. If the primary beneficiary is deceased, the insurance policy stipulates that the contingent beneficiary is next in line to receive the benefits, preventing the proceeds from going to the estate or being left unaccounted for. This mechanism ensures a seamless transfer of benefits without legal complications that may arise from the primary beneficiary's death. In scenarios where there is no contingent beneficiary named, the proceeds might end up going to the insured's estate; however, the question specifically pertains to the situation where a contingent beneficiary exists. Therefore, identifying the correct flow of benefits in AD&D insurance is crucial for understanding how coverage operates in the unfortunate event of a beneficiary's death.