What is a beneficiary in life insurance?

A life insurance beneficiary is the person or organization that receives the death benefit of your life insurance policy after you pass away. Both term and permanent life insurance policies allow for beneficiaries, and the vast majority of policy owners name one or more people as their life insurance beneficiaries. To declare a beneficiary, you may need to speak with your life insurance company and fill out a specific form.

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Chris Tepedino is a feature writer that has written extensively about home, life, and car insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and C...

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Laura Walker graduated college with a BS in Criminal Justice with a minor in Political Science. She married her husband and began working in the family insurance business in 2005. She became a licensed agent and wrote P&C business focusing on personal lines insurance for 10 years. Laura serviced existing business and wrote new business. She now uses her insurance background to help educate...

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Reviewed by Laura Walker
Former Licensed Agent Laura Walker

UPDATED: Mar 8, 2022

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The Rundown

  • 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

If you are considering purchasing a life insurance policy, you may be wondering what a beneficiary is in terms of life insurance. In the simplest of terms, a beneficiary is someone who will receive the money from your life insurance policy after you die.

Regardless of whether you have a term or whole life insurance policy, you will be able to declare your own beneficiaries to make sure the people you want to receive the death benefit of your life insurance policy are the people named on your personal policy.

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

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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
AgeAverage 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
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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.

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