Alberta General Insurance Level 1 Practice Exam

The term "beneficiary" in the context of insurance refers specifically to a person or entity that is designated to receive benefits from an insurance policy upon the occurrence of a specified event, such as the death of the insured in life insurance or a covered loss in property insurance. This designation is crucial as it determines who will financially benefit from the policy when a claim is made.

Selecting the correct definition is important because understanding the role of the beneficiary provides clarity on how claims are processed and who is entitled to receive the proceeds. It highlights the relationship between the policyholder and the individual(s) who will receive the benefits, ensuring that those benefits are allocated correctly as per the wishes of the policyholder.

Other options do not accurately capture the essence of the term. The individual responsible for paying premiums does not inherently receive benefits from the policy, as they may not be the designated beneficiary. The insurance company underwriting the policy is a distinct entity that provides coverage but does not receive benefits. Finally, a clause specifying conditions under which a policy might be void relates to the terms of the agreement rather than the recipients of the benefits.