What Is a life insurance beneficiary? (2025)
Learn what a life insurance beneficiary is, who you can name, and how to avoid common mistakes. Find out what happens if no one is named and how beneficiaries claim payouts.
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Updated July 2025
A life insurance beneficiary is the person or entity you designate to receive your policy’s death benefit when you pass away. Choosing a beneficiary is one of the most important decisions in setting up a life insurance policy, as it directly determines who will receive the financial protection you’ve put in place.
Whether you’re purchasing life insurance to protect your family, support a loved one, or leave a legacy, understanding how beneficiaries work is essential to making sure your wishes are carried out.
Who can be a life insurance beneficiary?
A wide range of individuals and organizations can be named as beneficiaries on a life insurance policy, including:
- Individuals: Spouses, children, siblings, parents, friends, or domestic partners
- Trusts: Often used when leaving money to minors or managing complex estate plans
- Charities or nonprofits: Useful for legacy giving and tax planning
- Businesses or business partners: Common in buy-sell agreements or key person insurance
You can name more than one beneficiary and assign a percentage of the payout to each. In most cases, there are no citizenship, residency, or family relationship requirements to be a beneficiary.
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Types of Beneficiaries
Primary vs. Contingent Beneficiaries
- Primary beneficiaries are first in line to receive the death benefit.
- Contingent beneficiaries receive the payout only if all primary beneficiaries are deceased or unable to claim it.
Revocable vs. Irrevocable Beneficiaries
- Revocable: Can be changed at any time without their permission.
- Irrevocable: Require their written consent to be changed or removed.
How to Name a Life Insurance Beneficiary
When purchasing a policy, you’ll be asked to name your beneficiaries. You can also change or add beneficiaries later by filling out a form with your insurer.
Be sure to provide:
- Full legal names
- Relationship to you
- Contact details (and Social Security number, if possible)
- Specific percentages if splitting among multiple people
Avoid vague designations like “my children” or “my spouse,” which may create confusion later.
Common Mistakes to Avoid When Naming a Beneficiary
- Not naming a contingent beneficiary: If your primary beneficiary dies first and there’s no backup, your estate may receive the payout instead.
- Failing to update after life changes: Marriage, divorce, or the birth of a child are common times to review your policy.
- Naming a minor without a custodian or trust: Children can’t receive life insurance payouts directly; a guardian or trust will be needed.
- Using outdated or incorrect names: Misspelled or incomplete names can delay or complicate the payout process.
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Changing a Beneficiary
You can usually update your beneficiary at any time if they are designated as revocable. To do so:
- Request a beneficiary change form from your insurer
- Complete and sign the form
- Submit it according to your provider’s instructions
Irrevocable beneficiaries require their written consent to make any changes. This is often used in divorce settlements or legal agreements.
What happens if no beneficiary is named?
If no beneficiary is listed—or if all listed beneficiaries have died—the life insurance payout usually goes to your estate. This triggers several complications:
- The funds must go through probate, delaying payment
- The death benefit may be subject to estate taxes
- Your intended recipients may not receive the money directly
To avoid this, always keep your beneficiary designations current and complete.
How Beneficiaries Find Out They’ve Been Named
Life insurance companies do not proactively contact beneficiaries when someone passes away. Here’s how beneficiaries typically find out:
- The policyholder notifies them in advance, providing details about the policy
- After the policyholder’s death, beneficiaries can contact the insurance company with proof of death
- If the policy details are unknown, survivors can use the National Association of Insurance Commissioners (NAIC) Life Insurance Policy Locator to search for unclaimed benefits
Policyholders should store their insurance documents in a secure but accessible location and inform their beneficiaries where to find them.
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Final Thoughts and Best Practices
- Review your beneficiary designations every 1–2 years
- Update them after major life changes
- Communicate your choices with loved ones
- Consider legal guidance for trusts or complex family situations
At Quote.com, we help make life insurance decisions easier. Use our free tools to compare policies, get expert insights, and make informed choices for your family’s future.
Frequently Asked Questions
Can a minor be a beneficiary?
Yes, but minors cannot legally receive a life insurance payout directly. Instead, the death benefit will be managed by:
- A court-appointed guardian, or
- A trust or custodian named by the policyholder
Creating a trust is often the preferred option for leaving life insurance to children.
Can you name a trust or charity as a beneficiary?
Yes. Naming a trust can provide control over how the money is distributed, especially if you’re leaving funds to minors or individuals with special needs. A charity can also be named to support a cause you care about—often with potential estate tax benefits.
Can multiple people be named as beneficiaries?
Yes, and this is very common. You can:
- Assign equal shares to each person (e.g., 50/50)
- Set custom percentages (e.g., 60% to your spouse, 40% to your child)
- Mix individuals with organizations (e.g., 80% to a child, 20% to a nonprofit)
Just be sure your total allocations add up to 100%.
What if a beneficiary dies before the policyholder?
If no other primary beneficiaries remain, the policy’s death benefit goes to the contingent beneficiary (if named). If none exist, the payout may default to your estate and go through probate.
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