Maryland Life and Health Insurance License Practice Exam

In a per capita distribution of a life insurance claim, benefits are payable to which of the following?

1. All beneficiaries based on specified percentages

2. Named living primary beneficiaries

3. The estates of deceased beneficiaries

4. Only the primary beneficiary listed

The correct answer is: Named living primary beneficiaries

In a per capita distribution of a life insurance claim, benefits are payable to named living primary beneficiaries. This method of distribution ensures that the insurance proceeds are equally divided among all living beneficiaries who are specified in the policy. The essence of a per capita approach is that it treats each named individual as an equal recipient of the benefits, rather than distributing the proceeds in a way that might consider degrees of relation or a larger class of heirs. Therefore, if a primary beneficiary has passed away, the benefit does not go to their heirs or the estate but is instead only distributed among those beneficiaries who are still alive at the time of the insured's death. This makes it clear and straightforward for the insurance company to process the claim and for the beneficiaries to understand how much they will receive. This clarity is why B is the correct choice, as it reflects the specific and direct relationship established between the insured and the living primary beneficiaries.