Life License Qualification Program (LLQP) Practice Exam

If the insured under a life policy has no dependents, where will the proceeds typically go if there are no beneficiaries named?

1. To the local charity

2. To the insured's estate

3. To a public beneficiary

4. To a government fund

The correct answer is: To the insured's estate

When an insured individual under a life policy has no dependents and has not named any beneficiaries, the proceeds of the policy typically go to the insured's estate. This is because, in the absence of designated beneficiaries, the insurance payout is treated as part of the insured's overall estate. The estate includes all assets and liabilities of the deceased person, and the proceeds from the life insurance policy will be subject to the estate's distribution as dictated by the will or, if no will exists, according to the rules of intestacy laws. This ensures that the funds are available to cover any outstanding debts or taxes before being distributed to heirs or other parties specified in the estate plan. Choosing the estate as the recipient is a standard practice, as it provides a clear legal framework for managing the deceased's assets. It avoids the complexities of assigning payouts directly to a charity, a public beneficiary, or a government fund, which are all not applicable in this circumstance without beneficiaries being designated.