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Insurance · Policy Provisions and Riders

What is the function of a 'beneficiary designation' in a life insurance policy?

Reviewed by Jordan Morley, Editorial Lead at 247SimpleTests. Written by the 247SimpleTests Editorial Team from the official source material cited on every question.

Correct answer

It names the person(s) or entity who will receive the death benefit, and can be revocable (changeable) or irrevocable (requiring the beneficiary's consent to change)

  1. A It names the person(s) or entity who will receive the death benefit, and can be revocable (changeable) or irrevocable (requiring the beneficiary's consent to change)
  2. B It determines the premium amount
  3. C It is the same as the insured
  4. D It names who pays the premiums

Why this is the answer

The beneficiary designation names who receives the policy's death benefit when the insured dies. Beneficiaries can be primary (first in line) or contingent (who receive the benefit if the primary is deceased). A revocable beneficiary can be changed by the policyowner at any time without the beneficiary's consent, while an irrevocable beneficiary's rights cannot be changed without that beneficiary's permission. Naming a beneficiary allows the death benefit to pass directly to them, generally avoiding probate. Understanding beneficiary designations, including the revocable/irrevocable distinction, is core policy-provisions knowledge on the life insurance exam.
Source: NAIC Model Outline, Beneficiary Designation

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About this topic: Policy Provisions and Riders

Policy provisions and riders cover the standard clauses — incontestability, grace period, reinstatement, misstatement of age, nonforfeiture options, settlement options — and the common riders such as waiver of premium and accidental death. This is one of 17 Life Insurance questions on policy provisions and riders, each with a full explanation on a single study page.

New to this exam? Our Insurance exam guide explains the format, scoring, and how to prepare.

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