In insurance, the beneficiary is the person or entity designated to receive the benefits or proceeds from an insurance policy in the event of the insured individual's death or upon the occurrence of a specified event. The beneficiary is typically named by the policyholder at the time the insurance policy is purchased, and their designation can be changed at any time by the policyholder.
Common types of beneficiaries Insurance Policies
Life Insurance
In life insurance policies, the beneficiary is the person or entity who will receive the death benefit when the insured individual passes away. The beneficiary can be a family member, spouse, child, friend, trust, or charity. There can be primary beneficiaries, who receive the proceeds directly, as well as contingent beneficiaries, who receive the proceeds if the primary beneficiaries are deceased or unable to receive the benefits.
Health Insurance
Health insurance policies typically do not have designated beneficiaries in the same way that life insurance policies do. Instead, health insurance policies cover medical expenses for the policyholder and their covered dependents, such as spouses and children, up to the policy limits.
Disability Insurance
In disability insurance policies, the beneficiary is the person who receives disability benefits if the insured individual becomes disabled and is unable to work. The beneficiary is usually the insured individual themselves, although some policies may allow for other individuals, such as a spouse or dependent, to receive the benefits.
Accidental Death and Dismemberment (AD&D) Insurance
AD&D insurance policies provide benefits to the beneficiary in the event that the insured individual dies or suffers a covered injury or dismemberment as a result of an accident. The beneficiary can be a family member, spouse, or other designated individual.
It's important for policyholders to keep their beneficiary designations up to date and review them periodically, especially after major life events such as marriage, divorce, the birth of a child, or the death of a beneficiary. By ensuring that the beneficiary designation accurately reflects their wishes, policyholders can help ensure that their loved ones are financially protected in the event of their death or disability.
