What is Beneficiary?
Insurance glossary entry on BeCovered.ai for the term "Beneficiary": The person or entity designated to receive policy benefits, most often on life or annuities. Scope: plain-language meaning for coverage discussions; confirm definitions on your policy forms.
The person or entity designated to receive policy benefits, most often on life or annuities.
Understanding Beneficiary
Beneficiary designations override wills for many insurance proceeds. Primary and contingent tiers matter if the primary predeceases or disclaims. Trusts are often named for estate liquidity or minor children.
Examples
- Spouse as primary beneficiary, children as equal contingents.
- Irrevocable life insurance trust (ILIT) as owner/beneficiary for estate planning.
- Business buy-sell agreements naming the company or partners as beneficiaries.
Common Questions About Beneficiary
How often should I update beneficiaries?
After marriage, divorce, births, deaths, or major estate changes. Stale beneficiaries are a leading source of litigation and unintended payouts.
Can a minor be a beneficiary?
Proceeds may be held by a court-appointed guardian unless a trust or UTMA arrangement is in place. Work with legal counsel for structured setups.
Related Insurance Types
Related Terms
Rider
An add-on provision to an insurance policy that changes or extends coverage.
Premium
The amount you pay to your insurance company for your coverage, typically monthly or annually.
Coverage Limit
The maximum amount your insurance company will pay for a covered claim.
Exclusion
Specific situations, conditions, or types of damage that your insurance policy does not cover.