Under which circumstance is a contingent beneficiary entitled to receive benefits?

A contingent beneficiary is designated to receive benefits under specific circumstances that typically arise when the primary beneficiary cannot. In this case, the correct scenario is when the primary beneficiary is deceased.

If the primary beneficiary passes away before the insured person, the contingent beneficiary steps in and becomes the recipient of the policy benefits. This ensures that the benefits are still allocated according to the insured's wishes, even if the primary choice is no longer available. Therefore, the role of the contingent beneficiary is crucial in maintaining the flow of benefits in the event of unforeseen circumstances affecting the primary beneficiary.

Other circumstances listed, such as non-payment of premiums, changing the policy, or willingly terminating the policy, do not activate the rights of the contingent beneficiary. Non-payment of premiums generally leads to a lapse in the insurance policy, meaning no benefits would be paid out at that time. Changing the policy may impact the designated beneficiaries, but unless specified, does not automatically grant rights to the contingent beneficiary without the primary being unable to fulfill their role. Lastly, when a policy is terminated willingly, it effectively ends the contract and there are no benefits to distribute, thus not entitling the contingent beneficiary to receive anything.