Who is a beneficiary in a life insurance policy?

A beneficiary in a life insurance policy is specifically the person or entity designated to receive the death benefit upon the death of the insured. This can include individuals such as family members, friends, or even organizations like charities. The key aspect of a beneficiary is that they are named in the policy and have a legal entitlement to the proceeds once the policyholder passes away.

The role of the beneficiary is crucial, as it determines who will benefit from the financial payout of the life insurance policy, ensuring that the insured's intent is honored. This designation can be changed by the policyholder during their lifetime, giving them control over who receives the benefits.

In contrast, the person who pays the premiums is the policyholder and does not automatically have to be the beneficiary. The legal heir of the insured may or may not be the beneficiary, depending on the selections made in the policy. The insurance company is responsible for paying out the death benefit but does not serve as a beneficiary; instead, they are the issuer and administrator of the policy.