Michigan Life Insurance Practice Exam

"Per capita" distribution refers to the method of distributing proceeds among living beneficiaries equally. In life insurance claims, when the policyholder specifies a per capita distribution, it means that the benefits are divided equally among all the living beneficiaries named in the policy at the time of the policyholder's death. This distribution ensures that each living beneficiary receives an equal share of the death benefit, regardless of their relationship to the deceased or the number of other beneficiaries.

This method contrasts with "per stirpes" distribution, where the share of any deceased beneficiary would be passed down to their descendants, which would not provide an equal share to all living beneficiaries. Similarly, other options like total estate value or distributions based on estate percentages do not align with the equal sharing principle defined in "per capita." This clarity in the distribution method helps prevent disputes among beneficiaries and provides a straightforward approach to handling life insurance claims.