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.
Definition maintained by the InsurTool Editorial Team. Last reviewed .
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?
In plain English: A beneficiary is the person (or people, or organization) you name to receive the death benefit of your life insurance policy when you die. They’re the ones who get the money. You should keep your beneficiary designations up to date, especially after big life events like marriage, divorce, or having kids.
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
- Primary Beneficiary — The first person or entity in line to receive the death benefit.
- Contingent Beneficiary — Receives the benefit if the primary beneficiary is deceased.
- Revocable Beneficiary — Can be changed without the beneficiary’s consent.
- Irrevocable Beneficiary — Cannot be changed without the beneficiary’s consent.
| Policy Type | How Long It Lasts | Cash Value | Typical Cost |
|---|---|---|---|
| Term Life | Set period (10, 20, 30 years) | No | Lower |
| Whole Life | Lifelong | Yes, fixed rate | Higher |
| Universal Life | Lifelong (flexible) | Yes, adjustable | Medium-High |
| Variable Life | Lifelong | Yes, invested | Highest |
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.
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)
- IRS (Internal Revenue Service) - Tax treatment of life insurance proceeds
- SEC (U.S. Securities and Exchange Commission) - Variable life insurance regulation
Related Terms
Life Insurance Term Life Insurance Whole Life Insurance Cash Value Premium
About this definition
Written and checked against the primary sources linked on this page by the InsurTool Editorial Team. Definitions describe how these terms are used in the United States; policy wording differs between insurers, and state law changes the meaning of some terms. Your own policy document is the authority for your coverage.
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