Insurance
What is Beneficiary?
Definition
A beneficiary is the person, trust or entity named to receive proceeds from a life insurance policy or retirement account upon the insured's death. Naming primary and contingent beneficiaries is required for the payout to bypass probate.
Real-World Example
A father names his spouse as primary beneficiary and his two children as equal contingent beneficiaries on a $500,000 term policy. When he passes, the spouse receives the full benefit within 30 days — tax-free.
Why It Matters
Beneficiary designations override a will. An outdated designation — ex-spouse, deceased parent — is one of the most common and costly estate-planning failures reviewed by probate courts.
Frequently Asked Questions
Can I change my beneficiary?
Yes, at any time, unless the beneficiary was designated as irrevocable in the policy.