What Is a Life Insurance Beneficiary?


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Key Takeaways

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When you take out a life insurance policy, you'll likely need to designate a beneficiary. Primary beneficiaries receive the death benefit first; secondary beneficiaries are next in line.

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Unlike revocable life insurance beneficiaries, irrevocable beneficiaries can't be changed without consent.

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If your life insurance has no beneficiary, the death benefit defaults to the estate as the life insurance beneficiary, potentially undergoing a lengthy probate process.

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Who Can Be a Beneficiary on Life Insurance?

Most people designate their spouse, significant other, children or parents as beneficiaries, but you could name a sibling, a close friend or a trust. When choosing your life insurance beneficiaries, you should consider where those funds would have the greatest impact in the event of your death.

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    In Some States, You Must Name Your Spouse a Beneficiary

    In community property states, you may be required to name your spouse as a life insurance beneficiary if you have one. If you name someone other than your spouse as a beneficiary, your spouse may still be entitled to 50% of the proceeds, regardless of who is named.

    In cases of separation, life insurance beneficiary rules after divorce may require updating to reflect current relationships and obligations.

    *Life insurance regulations vary significantly by state. Consult with a licensed insurance professional or attorney in your state for guidance specific to your situation.

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    Minors Can Be Beneficiaries

    Many parents take out life insurance policies to help provide for their children in the event of their death. You can name minors as life insurance beneficiaries, but they won't be able to receive the benefit directly if they're under 18 years old.

    For this reason, it's usually best to designate a spouse or other caregiver as the beneficiary.

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    Charities and Organizations Can Be Beneficiaries

    While it's common to name a loved one as a beneficiary, it's not required. You can also name a charity or other organization as a beneficiary.

    This might be a good option if you're already confident that your loved ones would be financially secure if you were to pass away.

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    Pets Cannot Be Beneficiaries

    A life insurance beneficiary must be able to accept an inheritance and sign documents. That's why you can't legally name your pet as a beneficiary of your policy.

    However, you can set up a trust designating the pet's guardian as the beneficiary.

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MONEYGEEK DICTIONARY

A party has insurable interest when they depend on the insured financially and would have difficulty supporting themselves in the event of the policyholder's death. For example, your spouse and any dependent children you might have most likely have an insurable interest.

However, you can't take out a life insurance policy on just anyone if you don't have an insurable interest. For instance, you likely couldn't take out a life insurance policy on your coworker.

Types of Life Insurance Beneficiaries

There are two main types of life insurance beneficiaries: primary and secondary or contingent beneficiaries. Primary beneficiaries are the main beneficiaries of an insurance policy.

Secondary or contingent beneficiaries only receive a death benefit if the primary beneficiary or beneficiaries can't receive it.

What is a Primary Beneficiary in Life Insurance?

Your primary beneficiary is the first beneficiary of your life insurance policy. You can have more than one primary beneficiary.

For example, if you have two younger siblings, you might name both as primary beneficiaries. Primary beneficiaries are the people to whom your life insurance payout will go first.

What is a Contingent Beneficiary in Life Insurance?

Contingent or secondary beneficiaries only receive a payout from your life insurance policy if your primary beneficiary is deceased.

Here's an example: you name your spouse as a primary beneficiary and your children as secondary beneficiaries. If your spouse passes away before you do, your children will receive the payout as secondary beneficiaries in the event of your death.

Revocable vs. Irrevocable Life Insurance Beneficiaries

Understanding the difference between revocable and irrevocable beneficiaries can impact your estate planning and financial security.

  • Revocable: Offers flexibility to make changes anytime without beneficiary approval. This adaptability helps when life circumstances change, such as after marriage, divorce or the birth of a child.
  • Irrevocable: Provides certainty but limits flexibility. Once designated, you can't make changes without the beneficiary's written consent. This type is chosen for alimony or child support agreements where financial security must be guaranteed.

The choice between revocable and irrevocable beneficiaries may have tax implications. Designating an irrevocable beneficiary can influence your estate's tax liability.

An irrevocable beneficiary may be considered a gift recipient under tax laws, potentially subjecting the policy value to gift taxes. The irrevocable status can sometimes remove the death benefit from your taxable estate, which could be advantageous for estate tax planning.

There are also disadvantages. If the irrevocable beneficiary's financial situation changes, you can't redirect funds to someone who might need them more without written consent.

How to Choose Beneficiaries for Life Insurance

Choosing the right life insurance beneficiary requires careful consideration of your current life stage, family structure, and financial obligations. Here's how to make informed beneficiary decisions that protect your loved ones.

Life Stage-Based Beneficiary Selection

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    Young adults and singles

    Consider parents as primary beneficiaries, with siblings as contingent beneficiaries. If you have dependents like aging parents, prioritize those who rely on your income.

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    Married couples

    Your spouse typically becomes the primary beneficiary, with children as contingent beneficiaries. Consider the surviving spouse's ability to manage finances and care for dependents.

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    Divorced individuals

    Remove ex-spouses unless required by divorce decree or child support obligations. Name children directly or create trusts for minor children.

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    Remarried individuals

    Balance obligations to current spouse and children from previous relationships. Consider splitting benefits or using trusts to ensure fair distribution.

Financial Dependency Assessment

Evaluate who depends on your income for daily expenses, debt payments, or future needs like college tuition. Those with the greatest financial need should receive priority consideration.

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REGULAR REVIEW SCHEDULE

Review your beneficiaries annually and after major life changes, including marriage, divorce, births, deaths, or significant income changes. Update designations within 30 days of life changes to ensure your wishes are current.

Update your beneficiaries whenever your financial responsibilities or family structure changes to keep your coverage aligned with your intentions.

Life Insurance Beneficiary Rules

Naming a beneficiary isn't just a formality. It carries legal and financial implications. Life insurance beneficiary rules govern how designations are made and what happens when circumstances change, such as divorce or a beneficiary's death. Understanding these rules helps ensure the right person receives the payout and prevents unnecessary disputes or delays.

Life Insurance Beneficiary Designation

When you take out a life insurance policy, you can name a beneficiary or multiple beneficiaries. If you don't name a beneficiary, your death benefit goes to your estate.

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    You Can Refuse to Name Beneficiaries

    It's not required to name a life insurance beneficiary. If your life insurance has no beneficiary, the proceeds will become part of your estate, and the probate court will oversee the distribution of funds.

    However, we don't recommend this option since it makes it more difficult for your loved ones and dependents to access the funds they need.

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    You Can Have Multiple Beneficiaries

    You can name multiple life insurance beneficiaries, both primary and contingent. For example, you might name your spouse as a primary beneficiary if you're married.

    If you have adult children, you might also name all of your children as contingent beneficiaries, who would receive the payout if your spouse is no longer alive when you pass.

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    You Must Have Consent

    If you're purchasing a life insurance policy for another person with the intent to name yourself as a beneficiary, you must first obtain their consent. You must also have insurable interest, meaning that you depend on the individual and would be financially impacted by their death.

    In most cases, it's a good idea to have an individual, such as a parent, take out a policy on their own behalf and name you as a beneficiary.

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    Beneficiary Lists Must Be Updated Manually

    If you experience a life-changing event, like a divorce, your beneficiary list will not be updated automatically. Beneficiary designations need manual updates to align with your current wishes.

    You may want to keep an ex-spouse as a beneficiary, for example, if they would be responsible for caring for your children in the event of your death.

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    Some Beneficiary Designations Are Irrevocable

    Some life insurance beneficiary designations are irrevocable, meaning they can't be changed unless the beneficiary agrees to forfeit their right. Some policyholders choose to name certain family members, such as dependent children, as irrevocable life insurance beneficiaries.

    You should think carefully before listing someone as an irrevocable life insurance beneficiary since it can be challenging to change in the future.

Your life insurance policy is separate from your will or other aspects of your estate, so it's best to name a beneficiary for your life insurance policy even if you've already set up a will.

How to Name a Life Insurance Beneficiary: Necessary Information

When naming a life insurance policy beneficiary, you'll need to provide specific information to ensure a smooth transfer of benefits. Here are some of the most common pieces of information life insurance providers require:

  1. 1

    Full Legal Name

    Providing the full legal names of your life insurance beneficiaries ensures no discrepancies or legal issues due to a name mismatch.

  2. 2

    Relationship to the Policyholder

    Establishing the connection between you and the life insurance policy beneficiary helps the distribution process.

  3. 3

    Social Security Number or Tax ID

    These are used for identification and tax purposes, ensuring that the right person receives the benefit.

  4. 4

    Contact Information

    This includes the life insurance beneficiary's address, phone number and email to facilitate communication and the transfer of benefits.

  5. 5

    Date of Birth

    This confirms the life insurance beneficiary's age, which is especially important if the life insurance beneficiary is under 18 years old.

  6. 6

    Percentage of Payout

    If you're naming multiple beneficiaries, specify what percentage of the death benefit each should receive.

  7. 7

    Special Instructions

    If you want to attach any specific conditions or stipulations to the benefit, make sure to include them.

You should consider the impact of life events, such as divorce, on your life insurance beneficiary designation. Changing life insurance beneficiaries after such events ensures that your policy reflects your current intentions.

Providing detailed, accurate information is important for those with minors as life insurance beneficiaries or considering irrevocable life insurance beneficiaries. This helps avoid complications and ensures that your wishes are honored.

Consult your life insurance provider for any additional requirements they may have.

Common Mistakes to Avoid When Choosing a Life Insurance Beneficiary

Selecting a beneficiary for life insurance requires thoughtful consideration and periodic review. Here are common pitfalls to avoid:

  • Not Updating Beneficiaries: Your beneficiary designations should reflect life changes. Failing to update after major events can lead to unintended consequences, such as an ex-spouse receiving the death benefit.
  • Naming a Minor Directly: Minors can't receive life insurance proceeds directly. Consider setting up a trust or appointing a guardian to manage funds until they reach majority age.
  • Being Vague: Ambiguous naming can lead to legal disputes. Use full names and identifying information to eliminate confusion.
  • Overlooking Contingent Beneficiaries: What if primary beneficiaries predecease you or can't accept the benefit? Name contingent beneficiaries as a backup to ensure proper asset distribution.
  • Ignoring Spousal Rights: In community property states, spouses may have a legal claim to the death benefit portions. Failing to consider this can result in legal complications.

Avoiding these mistakes saves your loved ones from legal hassles and ensures proper asset distribution.

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KEEP YOUR BENEFICIARIES UPDATED

Regularly updating your life insurance policy's beneficiaries ensures that it reflects changes in your life and fulfills your intentions for owning a policy.

Life Insurance Beneficiary Rules After Divorce

If you get divorced, it doesn't automatically change your life insurance policy's beneficiary. To remove your former spouse as a beneficiary, you must manually update your life insurance policy.

Even if you get divorced, you may still be legally required to share a portion of the death benefit with your ex-spouse, particularly if you share joint custody of children. Maintaining your ex-spouse as a beneficiary for life insurance might be necessary to ensure they can provide for your children in the event of your passing.

Laws and life insurance beneficiary rules after divorce vary by state. It's wise to consult an attorney to ensure you know your obligations.

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MONEYGEEK EXPERT TIP

If you don’t update your life insurance policy after a divorce, your ex-spouse might receive more of the death benefit than you’re comfortable with. After any major life event, including divorce, you should review your life insurance policy to ensure the named beneficiaries align with your wishes.

How to Change Beneficiary on Life Insurance

Life circumstances may change, and your life insurance beneficiaries should reflect those changes. Whether you've recently married, divorced, welcomed a new child or experienced a loss, these major life events are signals to review and update your life insurance beneficiaries.

Ensure your life insurance benefits go to the right people at the right time by following these steps.

  1. 1

    Contact Your Insurance Provider

    Get in touch with your life insurance provider. It'll guide you through its specific process, which can vary from one company to another.

  2. 2

    Fill Out a Change Form

    Your insurance provider will require you to complete a "Change of Beneficiary" form. This form legally documents your new choice of life insurance policy beneficiary.
    Make sure to fill it out accurately to avoid any future complications.

  3. 3

    Submit Documentation

    You may need to provide additional documents for verification along with the change form. Depending on the nature of the change and the provider's requirements, this could include identification forms or legal papers.

  4. 4

    Confirm the Change

    Follow up with your insurance provider to confirm that they have accurately updated your life insurance beneficiary information. This final step ensures that your intentions are documented and will be executed as planned.

CAN A LIFE INSURANCE BENEFICIARY BE CHANGED AFTER DEATH?

A life insurance beneficiary can't be changed after the policyholder's death if the designation was irrevocable or the policyholder has passed away.

Life Insurance Death Benefit Payout

Beneficiaries must file a claim with the life insurance company to receive a payout. The primary beneficiary is the first designated recipient. If the primary beneficiary is no longer living, secondary or contingent beneficiaries are eligible to receive the benefit.

Minors can't directly receive death benefits. Instead, funds are typically held by a court-appointed guardian, trustee, or through a trust structure until the minor reaches the age of majority (usually 18 or 21, depending on state law).

Required Documentation Checklist:

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Certified death certificate

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Completed claim forms from the insurance company

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Policy number and policyholder information

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Beneficiary identification (driver's license or passport)

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Proof of beneficiary relationship to the deceased

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    Beneficiaries Must Make a Claim to Receive a Death Benefit

    Life insurance beneficiaries must file a claim with your insurer to receive a payout. The process isn't automatic. If a policy has multiple beneficiaries, each must make a separate claim to receive their portion.

    Claim Processing Timeline: Most insurers process death benefit claims within 14 to 60 days after receiving all required documentation. Simple claims with complete paperwork often process faster, while complex situations may take longer.

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    The Primary Beneficiary Is the First Person (Or, if Multiple Primary Beneficiaries, Persons) to Receive the Death Benefit

    If the policy has a designated primary beneficiary, they receive the death benefit first. If the primary beneficiary is deceased, a contingent beneficiary is eligible to file a claim.

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    The Contingent Beneficiary Gets the Money if the Primary Beneficiary Is Deceased

    Contingent beneficiaries can only receive a payout if the primary beneficiary is unable to do so. This typically means the primary beneficiary has passed away. They may also be unreachable or have declined to accept the payout.

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    You Can Choose How the Funds Will Be Dispersed

    Policyholders can choose how to distribute life insurance payouts. You might divide the payout equally between named primary beneficiaries.

    You can also choose a percentage for each beneficiary. For example, 50% might go to your spouse and 50% split among your children.

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    Minors Can’t Receive Death Benefits

    Many people purchase life insurance to provide for their families. While minors can be named beneficiaries, they can't receive death benefits until they turn 18.

    Instead, proceeds go to their legal guardian. You may set up a trust to ensure funds are used to provide for your children, grandchildren or other dependent minors.

Factors That May Delay Processing

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Missing or incomplete documentation

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Death occurring during the contestability period (first two years)

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Suspicious circumstances requiring investigation

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Disputes between multiple beneficiaries

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Outstanding policy loans or unpaid premiums

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MONEYGEEK EXPERT TIP

Certain circumstances would prohibit a death benefit payout to beneficiaries. These include application fraud, nonpayment of premiums, contestable circumstances, or not providing proper documentation (such as a death certificate).

— Mark Friedlander, Director, Corporate Communications, Insurance Information Institute

How is Life Insurance Paid Out to Multiple Beneficiaries?

You can split payouts between multiple beneficiaries in various ways: equally, by percentage, or to benefit younger generations if a beneficiary has passed away. You can change how your policy's payout is split at any time.

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    Per Capita

    Per capita divides the benefit "per head," so each beneficiary receives an equal sum. This works well when naming multiple adult children as beneficiaries.

    If a beneficiary passes away, the payout is divided equally between the remaining beneficiaries.

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    Per Stirpes

    Per stirpes means "by branch" and passes death benefits along the family lineage. For example, if you list three adult children as primary beneficiaries and one passes away, their children (your grandchildren) would receive their parent's portion.

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    Specific Percentage

    You can allot different percentages to different beneficiaries. For instance, your spouse might receive 70% and your parents or children 30%. This method works when beneficiaries have differing levels of financial dependence on you.

These distribution methods ensure beneficiaries receive their intended shares, reflecting your wishes and their needs. You can change beneficiaries and adjust preferences to match life changes. Regular reviews and updates to your beneficiary designation are important for estate planning.

What Happens to Life Insurance with No Beneficiary?

If you don't name a life insurance beneficiary, the death benefit goes to your estate. This triggers a legal process known as probate, where a court oversees the distribution of your assets.

Probate can be a lengthy and costly process that may delay the disbursement of the death benefit to your loved ones.

When the death benefit is part of your estate, it becomes accessible to creditors. This means that any outstanding debts could be paid off using the death benefit, reducing the amount that goes to your heirs.

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LIFE INSURANCE BENEFICIARY VS. WILL: WHICH TAKES PRECEDENCE?

Your life insurance beneficiary designation overrides your will, a critical distinction many people don't realize. If your will names one person but your policy lists someone else, the policy beneficiary receives the death benefit, regardless of what your will states.

This legal precedent means your beneficiary designation acts as your final word on who gets your life insurance payout. That's why updating your beneficiary after major life changes like marriage, divorce, or having children is essential for proper estate planning.

What is a Beneficiary for Life Insurance: Bottom Line

Your life insurance beneficiary is the person who receives the benefit of your policy after your death. In this guide, we covered the rules you need to know and how to choose the right beneficiary.

The beneficiary is often a close family member, such as a spouse, parent or sibling. It's also possible to name multiple people as life insurance beneficiaries.

The type of life insurance policy you have and who you name as your beneficiary will determine how the payout process unfolds. Life insurance beneficiaries must first file a claim with the insurance company, after which insurers pay out claims within 14 to 60 days.

For life insurance policies without a beneficiary, the policy's proceeds may become part of the estate, which can complicate the distribution of funds.

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Life Insurance Beneficiary: FAQ

Life insurance protects the beneficiary, not the policyholder. Our answers to common questions can help you make better decisions about your life insurance beneficiaries.

What is a beneficiary for life insurance?

Who can you name as a life insurance beneficiary?

Is your spouse automatically your beneficiary on life insurance?

What is a contingent beneficiary for life insurance?

Who receives the life insurance death benefit?

How does a divorce affect your life insurance policy?

Can you designate more than one life insurance beneficiary?

How do you split life insurance beneficiaries?

What if your chosen beneficiary passes away before you do?

What happens to life insurance with no beneficiary?

What happens when life insurance goes to the estate?

What happens if the owner of a life insurance policy dies before the insured?

Do life insurance companies contact beneficiaries?

How long does a beneficiary have to claim a life insurance policy?

What happens if the beneficiary does not claim life insurance?

How do you change the beneficiary on life insurance?

Who can change the beneficiary on a life insurance policy?

How do you find out if you are a beneficiary on a life insurance policy?

How do you collect life insurance as a beneficiary?

Who gets life insurance if the beneficiary is deceased?

Can child support take life insurance from the beneficiary?

What happens if you have two primary beneficiaries and one dies?

What information do you need to make someone your beneficiary?

Is it better to have both primary and secondary beneficiaries?

What happens if you have an irrevocable primary beneficiary?

What takes precedence: life insurance beneficiary status or a will?

Life Insurance Policy Beneficiary: Our Review Methodology

Understanding who can be your life insurance beneficiary and the rules around naming them is crucial for protecting your family's financial future. We researched beneficiary designation requirements, explored the differences between primary and contingent beneficiaries, and examined state-specific rules that affect how benefits get distributed to ensure you have accurate, actionable guidance.

Beyond explaining beneficiary basics, we also analyzed 1,488 life insurance quotes alongside customer satisfaction ratings, financial stability reports and product offerings to rank the best life insurance companies. Once you decide on your life insurance beneficiary, you'll want to find an insurer that offers competitive rates and will reliably pay claims to your loved ones when the time comes.

Our Research Approach

We created a scoring system specifically designed to evaluate what matters most when your beneficiaries file a claim: financial strength, customer service quality and fair pricing. Companies earn up to five points in each category, which we use to calculate an overall MoneyGeek score out of 100.

We chose insurers based on their broad national coverage and ability to provide online quotes, ensuring our recommendations work for families across the country.

Our Scoring System

We weighted each category based on its importance to beneficiaries receiving payouts:

  • Affordability: 30%
  • Financial Stability: 25%
  • Buying Process: 20%
  • Customer Satisfaction: 15%
  • Product Diversity: 10%

What We Measured

Each company's score includes:

  • Cost data obtained through online quotes
  • Financial strength ratings from AM Best and years in business
  • Customer satisfaction data from the National Association of Insurance Commissioners (NAIC) complaint index
  • Buying process tools, such as online materials and payment options
  • Life insurance product variety offered

Our Sample Customer Profile

We used this standard profile to gather quotes:

  • 40-year-old man
  • Nonsmoker
  • 5 feet 9 inches tall, 160 pounds
  • Average health rating

We modified this profile by age, gender, height, weight, tobacco use, health rating and location to collect quotes across different customer types. We also gathered quotes for various term lengths and coverage amounts to identify cost patterns that help families choose appropriate protection levels.

Premiums reflect our standard profile unless noted otherwise. Coverage costs and company information were updated in 2025.

Life Insurance Beneficiaries: Related Articles

About Mark Fitzpatrick


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Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.

Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!

Passionate about economics and insurance, he aims to promote transparency in financial topics and empower others to make confident money decisions.


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