Difficulty: Easy

Average Score: 100%

At the time of an insured's death, a per capita distribution of policy proceeds are paid to

Rationale

At the time of an insured's death, a per capita distribution of policy proceeds are paid to the named living primary beneficiaries.

In a per capita distribution, policy proceeds are distributed equally among the surviving primary beneficiaries named in the policy. This method ensures that each living beneficiary receives an equal share, regardless of the number of deceased beneficiaries.

A (the estate of the deceased beneficiaries) YOUR ANSWER

This option is incorrect because a per capita distribution does not involve the estate of deceased beneficiaries. Instead, it directly distributes the proceeds among the living beneficiaries, bypassing any claims from the estates of those who have passed away.

B (the primary beneficiary's children if the primary has predeceased the insured) YOUR ANSWER

This statement is inaccurate in the context of a per capita distribution. If a primary beneficiary predeceases the insured, their share would not automatically go to their children under per capita distribution; rather, it would be divided among the remaining living primary beneficiaries.

C (all the primary and contingent beneficiaries in equal installments) YOUR ANSWER

This choice is misleading because per capita distribution specifically refers to the equal distribution among only the living primary beneficiaries, not including contingent beneficiaries. Contingent beneficiaries would only receive proceeds if no primary beneficiaries are alive.

D (the named living primary beneficiaries) CORRECT

This option correctly identifies the recipients of the policy proceeds in a per capita distribution. Only those primary beneficiaries who are alive at the time of the insured's death receive equal shares of the proceeds, adhering to the principles of per capita distribution.

Conclusion

A per capita distribution ensures that only the living primary beneficiaries named in the policy receive equal shares of the proceeds upon the insured's death. This method avoids complications involving deceased beneficiaries or their estates, maintaining clarity in the distribution process. Understanding this distribution method is crucial for ensuring that the intended beneficiaries receive their rightful shares without confusion or delay.

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