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What Are Beneficiaries?

There are many questions that come with buying a life insurance policy. One of the most common — and one of the most important — is, “What are beneficiaries?” Our guide explains what beneficiaries are, the different types of beneficiaries, and how to choose one for your life insurance policy.

What Is a Beneficiary?

A beneficiary is the person who receives the death benefit of a life insurance policy. It’s usually a relative of the policyholder, such as a spouse or child. Some people choose an entity as their beneficiary, such as a trust or a charity.

Types of Life Insurance Beneficiaries

There are a few different types of life insurance beneficiaries. Your options will vary depending on the type of policy you purchase.


All life insurance policies have a primary beneficiary. This is the person or entity that receives your death benefit after you pass away.

Contingent or Secondary

Contingent beneficiaries, sometimes called secondary beneficiaries, are also standard on life insurance. If your primary recipient died or the life insurance company can’t locate them, the contingent beneficiary receives the death benefit.


Some policies allow you to designate a tertiary beneficiary. They receive the death benefit if the primary and contingent beneficiaries have died or can’t be contacted by the life insurance provider.


If you have revocable beneficiaries, you can change them at any point. This means you can change how much of the death benefit they receive, update their status from primary to contingent, or make any other changes during your lifetime.


Irrevocable beneficiaries are permanent. You can’t make changes to them without their consent. For example, if your spouse is your primary beneficiary and your adult child is your secondary, you’d need permission from both of them to add your grandchild as an additional beneficiary.

How to Choose a Life Insurance Beneficiary

Along with, “What are beneficiaries?” one of the biggest questions people have about life insurance is how to choose a beneficiary. There are a lot of important considerations you’ll need to keep in mind when making this decision. For example:

  • Do you have a spouse, child, or other relative who depends on you financially?
  • Who do you want to settle your estate?
  • Who do you want to handle the arrangements and payment for your funeral and pay for your other final expenses?

In most cases, married couples choose their spouse as primary beneficiary. They also often choose one or more of their children to be contingent beneficiaries. Of course, you can choose any family member, friend, or even charity or entity (such as a trust) you feel comfortable with. What’s important is leaving your loved ones the financial support you want your whole life insurance, term life insurance, or final expense insurance policy to provide, so keep that in mind when choosing.


Why do I need to name a beneficiary?

When a beneficiary isn’t named, the death benefit is paid to your estate. While the money isn’t lost, it can take months or even years for estates to be settled. This means your loved ones will have to wait to receive the funds from the policy, which could add stress to an already devastating time.

Who can be a beneficiary?

You can name a person, legal entity, charity, or your estate as your beneficiary. You can also list multiple people or entities to receive your death benefit in primary, contingent, and tertiary order. It’s a good idea to check with your life insurance provider on how many beneficiaries you can add to your policy if you’re interested in this option.

Who can change the beneficiaries on a life insurance policy?

If your beneficiaries are revocable, the policy owner alone can update who will receive the death benefit from your policy at any time. If they’re irrevocable, you’ll need consent from each person on the policy, including the representatives from any legal entities, before making any changes.

Are life insurance beneficiaries taxed on the death benefit?

Individuals don’t pay taxes on death benefit funds. If your death benefit is paid to a trust or your estate, taxes will be collected on it.

What are beneficiaries supposed to do with life insurance policy proceeds?

Beneficiaries are free to do what they want with the proceeds they receive from a life insurance policy. Usually, recipients use at least some of the funds to pay for their loved one’s final expenses, such as funeral costs, medical bills, and mortgages and other loans. Any leftover funds are often used to pay for surviving family members’ living expenses.

Burial insurance death benefits are smaller than many other types of policies because they’re designed to pay for funeral expenses. However, as with other types of life insurance, beneficiaries can use these funds in any way they wish.

“What are beneficiaries?” is a very common question when it comes to life insurance. It’s important to understand what they are and how to choose the right ones for your policy. That way, you’ll have peace of mind that your loved ones will receive the financial support they need after you pass away.