Tennessee Insurance Practice Exam 2025 – All-in-One Resource for Exam Success!

In an accidental death and dismemberment policy, a contingent beneficiary receives the policy proceeds if the primary beneficiary dies before the insured. This arrangement ensures that there is a secondary recipient who can claim the benefits if the primary beneficiary is not available to do so at the time of the insured's death.

The purpose of designating a contingent beneficiary is to provide clarity and assurance that the benefits will be directed to an alternative party, thereby preventing any complications that may arise if the primary beneficiary predeceases the insured. This arrangement is crucial in insurance policies to ensure that the intended benefits are distributed according to the policyholder's wishes.

In contrast, the other options do not accurately reflect how contingent beneficiaries are intended to operate within the structure of such policies. The contingent beneficiary's role is specifically linked to the fate of the primary beneficiary rather than to the status of the insured or arbitrary time frames related to the death of the insured.