Beneficiary

Last updated 29th Nov 2022
Disclosure

Definition

The term beneficiary is used to describe the person, or persons, that receive funds, property, or other benefits, from an insurance policy or will. A beneficiary is usually named by the benefactor when the insurance policy, or will, is signed.

In its most common form, a beneficiary is someone that inherits assets from another; therefore it's synonymous with the term inheritance.

Explanation

Typically, a beneficiary is a spouse, son or daughter of the deceased. However, it can also be a charitable organization, or any other entity designated by the benefactor. If the primary beneficiary is no longer living, or does not qualify under a restriction outlined by the benefactor, then the assets are passed to a contingent beneficiary.

In matters such as retirement plans, the law requires that a spouse be the designated beneficiary of the account. If not, the spouse must sign a written notice indicating they are aware of an alternate designation.

Related Terms

individual retirement account, disability insurance, COBRA

Moneyzine Editor

Moneyzine Editor