Beneficiary

Core Takeaways

• A beneficiary is a person or entity designated to receive the death benefit
• You can name primary and contingent beneficiaries
• Beneficiary designations can be changed at any time (for revocable beneficiaries)
• Keep your beneficiary designations up to date after major life events
• Use our Life Insurance Calculator to ensure your loved ones are adequately protected

What is a Beneficiary?

A beneficiary is a person or entity designated to receive the proceeds (death benefit) from an insurance policy upon the death of the insured person. The policyholder chooses who will be their beneficiary when they purchase the policy and can update this designation at any time.

How Beneficiaries Work

When you purchase a life insurance policy, you specify who should receive the death benefit. This person or entity becomes your beneficiary. You can name multiple beneficiaries, and you can specify the percentage of the death benefit each should receive. If the primary beneficiary is deceased or unable to receive the benefit, the contingent beneficiary receives it instead.

Types of Beneficiaries

Naming Beneficiaries

Individuals

• Spouses, children, family members, friends
• You can specify percentages for each beneficiary

Entities

• Trusts, charities, organizations, businesses
• Useful for estate planning and charitable giving

Designation Methods

• Per Stirpes: Beneficiaries share equally through generations
• Per Capita: Beneficiaries share equally among those alive

Important Considerations

It's important to keep your beneficiary designation up to date, especially after major life events like marriage, divorce, or the birth of a child. If no beneficiary is named or all beneficiaries are deceased, the death benefit may be paid to your estate, which could be subject to probate.

FAQs

Q: Can I name multiple beneficiaries?

A: Yes, you can name multiple beneficiaries and specify the percentage each should receive.

Q: What happens if my beneficiary dies before me?

A: If the primary beneficiary dies, the contingent beneficiary will receive the death benefit. If no beneficiary is alive, the benefit may go to your estate.

Q: Can I change my beneficiary after I purchase the policy?

A: Yes, for revocable beneficiaries, you can change your beneficiary at any time by contacting your insurance company.

Q: What is the difference between per stirpes and per capita?

A: Per stirpes means if a beneficiary dies, their share goes to their children. Per capita means all living beneficiaries share equally.

Authoritative Sources

• Insurance Information Institute (III)
• National Association of Insurance Commissioners (NAIC)
• U.S. Securities and Exchange Commission (SEC)

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