What Is Beneficiary? Definition | Epic Life Glossary

Why it matters

Naming the right beneficiary is the most important step after buying a policy. The payout usually goes straight to the named person and skips probate, so it can arrive faster than money in a will. Review the form after a marriage, divorce, birth, or death. An old or blank designation can send money to the wrong person or into the estate. Carriers may ask for a clear name, a relationship, and a percentage for each person.

Source: law.cornell.edu

Where we use this term

Related terms

Primary Beneficiary: A primary beneficiary is the first person or group in line to receive the death benefit. If the primary beneficiary is alive when the insured dies, that person is paid ahead of any contingent beneficiary.
Contingent Beneficiary: A contingent beneficiary is a backup who receives the death benefit only if every primary beneficiary has died or cannot be paid. It is also called a secondary beneficiary.
Death Benefit: A death benefit is the money a life insurance carrier pays to the beneficiary when the insured dies. It is usually paid as a lump sum and is generally income tax free to the beneficiary.
Policy Owner: A policy owner is the person or entity with the legal right to control a life insurance policy. The owner can change beneficiaries, take loans, surrender the policy, and name a new owner.
Probate: Probate is the court-supervised process of proving a will, paying debts, and passing a dead person's assets to heirs. Rules and time frames vary by state.

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Why it matters

Where we use this term

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