How does a contingent beneficiary receive policy proceeds in an Accidental Death and Dismemberment policy?

A contingent beneficiary receives policy proceeds in an Accidental Death and Dismemberment (AD&D) policy when the primary beneficiary has died before the insured individual. The purpose of a contingent beneficiary is to provide a backup option for the distribution of benefits in the event that the primary beneficiary cannot receive them. In the case of AD&D policies, if the primary beneficiary predeceases the insured, the policy proceeds would then be directed to the contingent beneficiary, ensuring that the benefits are disbursed according to the policyholder's wishes.

The other options present scenarios where benefits would not be payable to a contingent beneficiary. For example, if the insured dies from natural causes, the policy proceeds are not triggered by an AD&D policy, which specifically covers accidental death. Reaching a specific age, such as 65, does not automatically trigger payment to the contingent beneficiary either, as benefits are dependent on the occurrence of an accident-related event and the status of the primary beneficiary at that time. Lastly, having a terminal illness does not affect the contingent beneficiary's status; payments are typically based on the type of death, not on the insured's health status prior to an accidental event.