What Is a Life Insurance Beneficiary?

A beneficiary is the person or entity that receives a payout from an active life insurance policy after you die. You can select more than one beneficiary. When choosing a beneficiary, it is important to consider who will be financially impacted by your death.

Rachel Christian, writer and researcher for RetireGuide
  • Written by
    Rachel Christian

    Rachel Christian

    Financial Writer and Certified Educator in Personal Finance

    Rachel Christian is a writer and researcher for RetireGuide. She covers annuities, Medicare, life insurance and other important retirement topics. Rachel is a member of the Association for Financial Counseling & Planning Education.

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    Lee Williams
    Lee Williams, senior editor for RetireGuide.com

    Lee Williams

    Senior Financial Editor

    Lee Williams is a professional writer, editor and content strategist with 10 years of professional experience working for global and nationally recognized brands. He has contributed to Forbes, The Huffington Post, SUCCESS Magazine, AskMen.com, Electric Literature and The Wall Street Journal. His career also includes ghostwriting for Fortune 500 CEOs and published authors.

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    Eric Estevez, Independent Licensed Life Insurance Agent

    Eric Estevez

    Owner of HLC Insurance Broker, LLC

    Eric Estevez is a duly licensed independent insurance broker and a former financial institution auditor with more than a decade of professional experience. He has specialized in federal, state and local compliance for both large and small businesses.

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  • Published: October 12, 2020
  • Updated: May 23, 2023
  • 4 min read time
  • This page features 5 Cited Research Articles
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APA Christian, R. (2023, May 23). What Is a Life Insurance Beneficiary? RetireGuide.com. Retrieved April 16, 2024, from https://www.retireguide.com/life-insurance/payout/beneficiary/

MLA Christian, Rachel. "What Is a Life Insurance Beneficiary?" RetireGuide.com, 23 May 2023, https://www.retireguide.com/life-insurance/payout/beneficiary/.

Chicago Christian, Rachel. "What Is a Life Insurance Beneficiary?" RetireGuide.com. Last modified May 23, 2023. https://www.retireguide.com/life-insurance/payout/beneficiary/.

Life Insurance Beneficiaries: The Basics

A life insurance beneficiary is the person or organization that receives a policy’s payout — or death benefit — after you pass away.

A beneficiary only receives money from a life insurance company if your policy is active at the time of your death.

Beneficiaries can include:
  • Family
  • Friends
  • A legal guardian for your minor children
  • Your estate
  • A trust
  • A charity

Keep in mind that some states have laws regulating who you can and can’t name as a beneficiary.

You’ll need to provide the insurer with some basic information about your selected beneficiary, including their full name, birthday and Social Security number.

It’s wise to revisit your policy every few years to ensure your designations are correct and your contact information is up to date.

Primary and Contingent Beneficiaries

A primary beneficiary is the first person you want to receive the life insurance money when you die. Many people designate their spouse or partner.

A contingent, or secondary, beneficiary is the person who receives the death benefit if the primary beneficiary is deceased.

It’s important to note that a contingent beneficiary won’t receive death benefit money if any of the primary beneficiaries are still alive.

You should always name a contingent beneficiary, according to Life Happens, a nonprofit dedicated to educating consumers about the importance of life insurance.

Otherwise, leaving behind life insurance without a living beneficiary may cause money to go to someone you never intended your policy to benefit. It may also require a court-appointed administrator to sort things out.

You can select multiple primary beneficiaries and multiple contingent beneficiaries.

If you name multiple beneficiaries, you can decide how much of the payout each party receives. You can divvy up the death benefit as a percentage or as a specific dollar amount per person.


Revocable vs. Irrevocable Beneficiaries

There are two types of beneficiary classes: Revocable and irrevocable beneficiaries.

With a revocable beneficiary, policy owners can change designations at any time without the consent of a previously named beneficiary.

In contrast, when someone is named as an irrevocable beneficiary, the policy owner cannot change the designation without consent from the original beneficiary.

In other words, the entitlements of an irrevocable beneficiary are guaranteed.

Children are often named as irrevocable beneficiaries. A court can also order someone to purchase a life insurance policy and designate an ex-spouse as an irrevocable beneficiary in order to cover child support or alimony payments.

Mistakes to Avoid

Selecting beneficiaries is an important decision. The life insurance money they receive can help cover your loss of income, pay for funeral arrangements or finance a college education.

However, simple mistakes can complicate your good intentions.

Mistakes to Avoid When Naming Beneficiaries
Naming a Minor as a Beneficiary
Legally, a child under 18 years old cannot access a life insurance death benefit. That’s why you should appoint a legal guardian for your children in your will and designate this person as your life insurance beneficiary. Otherwise, a court will name a guardian on your behalf who has oversight of the money until the child comes of age.

Another option is to establish a trust that can receive the life insurance proceeds until the child is 18 or older.

Forgetting to Update Your Designations
Life changes, so it’s important to keep your beneficiary designations updated over time. Major life events — including the birth or adoption of a child, death of a beneficiary or divorce — are critical times to revisit your life insurance policy. If you don’t, a large payout may end up with the wrong person. This can happen if your ex-spouse is still on the policy, or a legal guardian is named when a child is no longer a minor.
Assuming a Will Covers Any Updates
A life insurance policy is a legal document that bypasses probate. Changes to your will do not affect your life insurance beneficiaries. For example, if your will names your current wife as the beneficiary of your estate, but your life insurance policy still lists your ex-wife as the beneficiary, the death benefit must be paid to your ex-wife.
Neglecting to Tell People About Your Policy
It's wise to tell your beneficiaries about your life insurance policy. If they don’t know it exists, or their information isn’t correct on the form, they may never make a claim with the insurer. You may also want your beneficiaries to know how much the policy is worth and where they can locate contract details after your death.
Last Modified: May 23, 2023

5 Cited Research Articles

  1. Danise, A. (2020, June 26). 10 Things Life Insurance Beneficiaries Should Know. Retrieved from https://www.forbes.com/advisor/life-insurance/best-life-insurance-companies/
  2. Rosenberg, E. (2019, December 11). Your life insurance beneficiary determines who gets the money upon your death, and your will can't override it. Retrieved from https://www.businessinsider.com/personal-finance/what-is-a-life-insurance-beneficiary
  3. Austin, A. (2019, April 29). Who Can I Name as a Beneficiary on My Life Insurance Policy? Retrieved from https://lifehappens.org/blog/who-can-i-name-as-a-beneficiary-on-my-life-insurance-policy/
  4. National Foundation for Credit Counseling. (2018, July 12). Assign Beneficiaries Correctly for Life Insurance — Ask an Expert. Retrieved from https://www.nfcc.org/blog/helping-family-best-use-life-insurance-money-youre-gone/
  5. Insurance Information Institute. (n.d.). What is a beneficiary? Retrieved from https://www.iii.org/article/what-beneficiary#:~:text=A%20beneficiary%20is%20the%20person,Two%20or%20more%20people