Practice Quiz

Health and Life Insurance

Category - Annuities & Policies

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Jessica designates her $300,000 life insurance policy beneficiaries as her 3 sons - Ben, Jeff, and Chris. Ben has two children of his own, Jeff has three children and Chris has one child. Jeff and Chris are in a car wreck that kills Jeff instantly. Because Jessica has a per capita designation on her life insurance policy, when she dies the policy will be divided how?
  1. The policy will be divided evenly between Ben, Chris, and Jeff’s wife.
  2. The policy will be divided evenly between Ben and Chris
  3. The policy will be divided evenly between Ben, Chris, and Jeff’s three children
  4. The policy will be divided between Ben, Chris, and Jeff’s portion will be split between his children and wife.
Explanation
Answer: B - The per capita designation on Jessica’s life insurance policy will divide the payments between Ben and Chris. Per capita means that Jeff’s wife and children are no longer included in the payments of Jessica’s life insurance policy. Unlike per stirpes, per capita simply removes the deceased individual from the receiving beneficiary group and divides that individual’s portion equally.
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