A beneficiary is the person or entity you designate to receive the death benefit from your life insurance policy when you pass away. Choosing and maintaining accurate beneficiary designations is one of the most important steps in owning a life insurance policy.
Primary vs. contingent beneficiaries
Most policies allow you to designate:
- Primary beneficiary: The first person or entity in line to receive the death benefit. You can name multiple primary beneficiaries and specify the percentage each receives.
- Contingent beneficiary: Also called a secondary beneficiary, this person receives the death benefit if the primary beneficiary has already passed away or is unable to receive the funds.
Who can be named as a beneficiary?
Beneficiaries can include:
- A spouse or domestic partner
- Children or other family members
- A trust (often used in estate planning)
- A charity or nonprofit organization
- A business partner (in business insurance contexts)
Minors can be named as beneficiaries, but they typically cannot directly receive large sums. A trust or guardian may need to be designated to manage funds until the child reaches adulthood.
Why beneficiary designations matter
Your beneficiary designation on a life insurance policy typically overrides your will. If your will says one thing and your beneficiary designation says another, the beneficiary designation controls. This means outdated designations — naming an ex-spouse, a deceased parent, or a former partner — can have significant unintended consequences.
When to review your beneficiary designations
Update your beneficiary designations after:
- Marriage, divorce, or separation
- The birth or adoption of a child
- The death of a named beneficiary
- Significant changes in your financial or family situation
Reviewing designations periodically — even without a triggering event — is a good practice.
Life insurance terms and policy provisions vary by insurer and policy type. This entry is educational information only.