Beneficiary

The designated individual that gets paid a death benefit when someone dies. Also defined as: The party or parties declared by a life insurance policy owner (A policy may have one or more beneficiaries) to receive the proceeds (net death benefit) of the life insurance policy after the insured’s death.

  • An individual(s), corporation, or trust are typical examples. Name associations:
    • Primary¾first to receive benefits,
    • Contingent¾named to receive a gift under the terms of an insurance policy; the benefactor only receives the gift under particular circumstances,
    • Tertiary ¾only receives proceeds if both the primary and secondary beneficiaries are deceased at the time the policy pays out,
    • Revocable¾a beneficiary the policyholder has the right to remove or replace, and
    • irrevocable¾the recipient must agree to any changes in rights to compensation from these entities.
  • There can be different levels of the beneficiary designated for a policy. These levels include:
    • Primary,
    • Secondary, or
    • Tertiary

The above are contingent beneficiaries in case of death of the recipient.

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