Finance (FINC) Test 2 Practice

The proceeds of a life insurance policy go to the person or entity named as the beneficiary in the policy. The policy owner (who may be the insured or someone else) controls who gets the death benefit. The insurance company is simply the payer of the benefit, not a recipient. A mortgage lender would only receive the benefit if they were specifically named as a beneficiary or if the policy is set up with a loan-related rider. If no beneficiary is named, the funds may go to the policy owner or the insured’s estate, depending on the policy terms.