What is a beneficiary?

Beneficiaries explained

Life insurance is specifically designed to pay money to someone other than the insured. A beneficiary is the person or entity, such as a trust, charity, or estate that an insured designates to receive the money from the policy. If the insured does not identify a beneficiary, the benefit is paid to the insured’s estate.

Primary beneficiaries are the individuals or entities who receive the death benefit if they can be located after the insured’s death. Contingent beneficiaries get the death benefits only if the primary beneficiaries cannot be found. If neither type of beneficiary can be found after an insured’s death, the benefits will be paid to the insured’s estate. Instructions for beneficiaries are helpful.

For example, if two primary beneficiaries are named, but one of them has died, what will happen to that beneficiary’s share? Will the other primary beneficiary receive it all, or will a dependent of the deceased beneficiary get that share?

Naming beneficiaries, and keeping the information up to date, is an important task. Beneficiaries should be identified as clearly as possible, with their relationship to the insured, their social security numbers, addresses, and any other information that will help the insurance company find them, and confirm their identity, upon the insured’s death.