Life Insurance Beneficiary: Insurance Terms Explained (2024)
Secure your loved ones' future with a life insurance beneficiary. Understand the process, policy options, and compare quotes for optimal coverage. Learn how to name a beneficiary, who can be a beneficiary, and the importance of having one. Discover the difference between primary and contingent beneficiaries and how to change them.
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Scott W. Johnson
Licensed Insurance Agent
Scott W Johnson is an independent insurance agent in California. Principal Broker and founder of Marindependent Insurance Services, Scott brings over 25 years of experience to his clients. His Five President’s Council awards prove he uses all he learned at Avocet, Sprint Nextel, and Farmers Insurance to the benefit of his clients. Scott quickly grasped the unique insurance requirements of his...
Licensed Insurance Agent
UPDATED: May 28, 2023
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Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.
UPDATED: May 28, 2023
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance company and cannot guarantee quotes from any single insurance company.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
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Are you wondering, “What is a beneficiary in life insurance?” Understanding the concept of a beneficiary is crucial when it comes to life insurance. In this article, we will explore the definition and role of a beneficiary, as well as the importance of naming one. We will cover topics such as who can be a beneficiary, primary and contingent beneficiaries, and how to change beneficiaries.
- A beneficiary is someone who will receive the money from your life insurance policy after you die
- You can name both a primary and contingent beneficiary to your life insurance policy
- Term life insurance and permanent life insurance policies both offer the option to name a life insurance beneficiary
Additionally, we’ll discuss different types of life insurance policies that include beneficiaries. To ensure the financial security of your loved ones, it’s essential to have the right life insurance coverage. Enter your ZIP code now to compare rates from the best insurance providers and safeguard your beneficiaries’ future.
Can anyone be the beneficiary of a life insurance policy?
As the owner of a life insurance policy, you can name anyone as the life insurance beneficiary of your policy. In most cases, the beneficiary of a life insurance policy is a person’s spouse, partner, child, loved one, or close friend. In some cases, policy owners may also name a charity, organization, or their own estates as the beneficiary of their policy.
With most life insurance policies, there are primary and contingent options when it comes to beneficiaries. A primary beneficiary is the person (or people) who will receive the death benefit of your life insurance policy when you pass away. As stated above, this typically includes very close family members or loved ones.
In some cases, the primary beneficiary of a life insurance policy passes away before or at the same time as the policyholder. When that happens, the contingent beneficiary becomes the primary beneficiary of the life insurance policy and will receive the death benefit. Essentially, having a contingent beneficiary means there is a secondary beneficiary of a life insurance policy should the first beneficiary pass away.
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Do I have to declare a beneficiary for my life insurance?
Because life insurance policies are not typically controlled by a person’s will, declaring a beneficiary is really the only way you will know that the death benefit of your policy will go to the people you want it to go to, and will be distributed in a manner you approve of.
It’s not obligatory that you name a beneficiary of your life insurance policy, but having a beneficiary is likely why you are purchasing a life insurance policy in the first place. After all, if you didn’t have anyone in your life that you felt responsible for supporting after your death, what would be the point of buying life insurance in the first place?
How do I name a beneficiary to my policy?
To make sure your beneficiary is recorded correctly, you should go to the provider through which you purchased your life insurance policy. For some people, this may be through your employer with a group insurance plan. For others, you may need to speak with your financial advisor or another financial professional who handles all of your retirement accounts.
For most people, naming the beneficiary of your life insurance policy can be done through your insurance company. You will likely need to fill out a form online so your company can file your beneficiary’s information with the rest of your account and policy information.
You will always need to provide the following information to add a beneficiary to your policy:
- Beneficiary’s full legal name
- Beneficiary’s relationship to you
In some cases, you may also need the following information from your beneficiary:
- Mailing address
- Email address
- Phone number
- Date of birth
- Social Security number
It is very important that any information you provide concerning your beneficiary is accurate. This will make it easier and faster for your insurance company to find your beneficiary and make sure they get the death benefit of your policy as quickly and easily as possible.
What types of life insurance include beneficiaries?
Virtually all types of life insurance policies include the option to name a beneficiary. With a few policies, such as a funeral expense policy, your beneficiary will automatically be a company or organization based on a contract you have created with that group. Otherwise, you have complete freedom to name anyone you want as the beneficiary of your life insurance policy.
Most people choose between either a term life insurance policy or a whole life insurance policy. A term policy covers you for a certain amount of time — normally anywhere from 10 to 30 years — while a whole life policy will cover you regardless of how long you live. With both of these policies, however, you are able to name a beneficiary.
Depending on your age, whether you’re married, whether you have children, and how much outstanding debt you have, it may be fairly easy for you to know which type of life insurance policy would be most beneficial for your loved ones.
The table below shows the average monthly term life insurance rates based on a person’s age and gender.
Average Term Life Insurance Rates by Age and Gender
| Age | $100,000: Male | $100,000: Female | $250,000: Male | $250,000: Female |
|---|---|---|---|---|
| 25 | $11.03 | $10.02 | $22.10 | $12.91 |
| 30 | $11.12 | $10.07 | $15.31 | $13.02 |
| 35 | $11.12 | $10.07 | $15.42 | $13.02 |
| 40 | $12.65 | $11.12 | $17.94 | $15.21 |
| 45 | $14.57 | $13.31 | $21.55 | $19.69 |
| 50 | $18.60 | $17.20 | $30.19 | $27.02 |
| 55 | $24.51 | $20.61 | $42.88 | $34.35 |
| 60 | $35.88 | $27.48 | $71.10 | $50.86 |
| 65 | $51.06 | $37.76 | $109.82 | $75.14 |
In comparison, check out the next table, which highlights the average monthly life insurance rates for preferred policyholders based on age.
Average Monthly Whole Life Insurance Rates by Age for Preferred Policyholders
| Age | Average Monthly Preferred Life Insurance Rates |
|---|---|
| 25-years-old | $89.31 |
| 30-years-old | $102.53 |
| 35-years-old | $120.59 |
| 40-years-old | $143.03 |
| 45-years-old | $173.48 |
| 50-years-old | $213.28 |
| 55-years-old | $269.01 |
| 60-years-old | $355.44 |
| 65-years-old | $474.85 |
As you can see, the monthly rates between a term life insurance policy and a whole life insurance policy can be radically different. Because of this, it’s important to know what you’re looking for in a policy before you make any final decisions.
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What’s the bottom line?
When it comes to a life insurance policy, there are no life insurance beneficiary rules. You have the freedom to make decisions and name beneficiaries according to what you think is best.
But make sure you are considering only the best insurance companies that can offer you the coverage you want at a price you can afford before you commit to a policy.
Frequently Asked Questions
What is a beneficiary in life insurance?
A beneficiary in life insurance is a person or entity designated by the policy owner to receive the death benefit in the event of the insured person’s death.
Who can be a beneficiary in life insurance?
The policy owner can choose any person or entity to be a beneficiary in their life insurance policy. Typically, spouses, children, other family members, or charitable organizations are chosen as beneficiaries.
Can a beneficiary be changed in a life insurance policy?
Yes, a policy owner can change the beneficiary of their life insurance policy at any time, as long as they are the owner of the policy. They can do this by filling out a change of beneficiary form and submitting it to the insurance company.
What happens if no beneficiary is named in a life insurance policy?
If no beneficiary is named in a life insurance policy, the death benefit will typically be paid to the insured person’s estate. The executor of the estate will then distribute the proceeds according to the insured person’s will or the laws of their state if they died without a will.
Can a minor be a beneficiary in a life insurance policy?
Yes, a minor can be a beneficiary in a life insurance policy. However, if the beneficiary is a minor, the insurance company will usually require the appointment of a guardian or trustee to receive the benefits on the minor’s behalf until they reach the age of majority.
What is a contingent beneficiary in life insurance?
A contingent beneficiary in life insurance is a person or entity named to receive the death benefit if the primary beneficiary predeceases the insured person. If the primary beneficiary is alive at the time of the insured person’s death, they will receive the death benefit, and the contingent beneficiary will not receive any payment.
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Scott W. Johnson
Licensed Insurance Agent
Scott W Johnson is an independent insurance agent in California. Principal Broker and founder of Marindependent Insurance Services, Scott brings over 25 years of experience to his clients. His Five President’s Council awards prove he uses all he learned at Avocet, Sprint Nextel, and Farmers Insurance to the benefit of his clients. Scott quickly grasped the unique insurance requirements of his...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.