What Is a Life Insurance Beneficiary: Definition, Rules & How It Works

A life insurance beneficiary receives policy payouts. Although most choose their spouse or family members, you can also name a close friend or charitable trust.

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What Is a Life Insurance Beneficiary: Definition, Rules & How It Works

Written by Mark Fitzpatrick

Updated: October 29, 2025

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Key Takeaways

When you buy a life insurance policy, you'll name a beneficiary. Primary beneficiaries receive the death benefit first; contingent beneficiaries are next in line.

You can change revocable life insurance beneficiaries anytime, but irrevocable beneficiaries can't be changed without their consent.

If your life insurance has no beneficiary, the death benefit goes to your estate, creating delays and making funds accessible to creditors through probate.

Who Can Be a Life Insurance Beneficiary?

Most people name their spouse, significant other, children or parents as beneficiaries, but you can choose a sibling, close friend or trust. Think about where the money would help most if you die.

In Some States, You Must Name Your Spouse a Beneficiary

Community property states may require you to name your spouse as a life insurance beneficiary. If you name someone else, your spouse may still be entitled to 50% of the proceeds.

Life insurance beneficiary rules after divorce may require updates to reflect current relationships and obligations.

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

Minors Can Be Beneficiaries

Many parents buy life insurance to provide for their children if they die. You can name minors as life insurance beneficiaries, but they can't receive the benefit directly if they're under 18. So it's usually best to name a spouse or other caregiver as the beneficiary.

Charities and Organizations Can Be Beneficiaries

Life insurance beneficiaries don't have to be family members; you can name charities or other organizations. If your loved ones are financially secure, charitable beneficiaries let you support causes you care about after your death.

Pets Cannot Be Beneficiaries

A life insurance beneficiary must be able to accept an inheritance and sign documents, so you can't legally name your pet as a beneficiary.

You can set up a trust naming the pet's guardian as the beneficiary instead.

MONEYGEEK DICTIONARY

A party has insurable interest when they depend on the insured financially and couldn't support themselves if the policyholder dies. Your spouse and dependent children likely have an insurable interest.

You can't take out a life insurance policy on just anyone without insurable interest. You couldn't take out a policy on your coworker, for example.

Types of Life Insurance Beneficiaries

Life insurance has two main beneficiary types: primary and contingent beneficiaries.

Primary beneficiaries are the main recipients of your policy's death benefit. They receive your life insurance death benefit first. You can name multiple primary beneficiaries, like naming both of your younger siblings.

Contingent beneficiaries receive the death benefit only if primary beneficiaries can't claim it. For instance, you name your spouse as primary beneficiary and your children as contingent beneficiaries. If your spouse dies before you, your children receive the death benefit.

Revocable vs. Irrevocable Life Insurance Beneficiaries

The beneficiary type you choose affects your estate planning and financial flexibility.

Revocable: You can change revocable beneficiaries anytime without their approval. This flexibility helps when life changes: marriage, divorce or having children.
Irrevocable: You can't change irrevocable beneficiaries without their written consent. This option works for alimony or child support agreements where financial security must be guaranteed.

Irrevocable beneficiaries affect your estate taxes differently than revocable ones. The death benefit gets removed from your taxable estate, lowering estate taxes. But the IRS treats irrevocable beneficiaries as gift recipients, which may trigger gift taxes on your policy's value. You can't redirect the funds without the beneficiary's written consent if your situation changes.

How to Choose Beneficiaries for Life Insurance

Your beneficiary choice depends on your life stage, family structure and financial obligations. Here's who to name based on your situation:

Life Stage-Based Beneficiary Selection

Young adults and singles

Name parents as primary beneficiaries with siblings as contingent beneficiaries. If you support aging parents, prioritize those who rely on your income.

Married couples

Name your spouse as primary beneficiary with children as contingent beneficiaries. Think about whether your surviving spouse can manage finances and care for dependents alone.

Divorced individuals

Remove ex-spouses unless your divorce decree or child support obligations require them. Name children directly or create trusts for minor children.

Remarried individuals

Balance obligations to your current spouse and children from previous relationships. Split benefits or use life insurance trusts to ensure fair distribution.

Financial Dependency Assessment

List 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.

REGULAR REVIEW SCHEDULE

Review your beneficiaries annually and after major life changes like marriage, divorce, births, deaths or significant income changes. Update designations within 30 days of life changes.

Update your beneficiaries whenever your financial responsibilities or family structure changes.

Information You'll Need When Naming Beneficiaries

When naming a life insurance beneficiary, you'll provide specific information about them. Here's what life insurance companies typically require:

Full Legal Name
Relationship to the Policyholder
Social Security Number or Tax ID
Contact Information (address, phone number and email)
Date of Birth
Percentage of Payout (for multiple beneficiaries)

You can also include any conditions or stipulations you want attached to the benefit.

How to Distribute Death Benefits to Multiple Beneficiaries

You can split payouts between multiple beneficiaries equally, by percentage or to benefit younger generations if a beneficiary dies. Change how your policy's payout is split anytime.

Per Capita

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

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

Per Stirpes

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

Specific Percentage

You can assign different percentages to different beneficiaries. Your spouse might receive 70% and your parents or children 30%. This works when beneficiaries have different levels of financial dependence on you.

How to Change the Beneficiary on a Life Insurance Policy

Your life insurance beneficiaries should reflect major life changes, like marriage, divorce, a new child or a loss. Update your beneficiaries so your benefits go to the right people.

1
Contact Your Insurance Provider
Reach out to your life insurance company. It'll walk you through its process.
2
Fill Out a Change Form
Complete a "Change of Beneficiary" form. This documents your new beneficiary choice. Fill it out accurately to avoid complications.
3
Submit Documentation
You'll likely need additional documents for verification along with the change form. This could include ID or legal papers, depending on your provider's requirements.
4
Confirm the Change
Follow up with your insurance company to confirm it updated your beneficiary information correctly.

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

What is a Beneficiary for Life Insurance: Bottom Line

Your life insurance beneficiary receives your policy benefits after you die. Most people name close family members like spouses, parents or siblings, but you can name multiple beneficiaries.

Choose someone who depends on your income or would face financial hardship without your support. Review your beneficiary designations annually and after major life events like marriage, divorce or the birth of a child to keep your coverage aligned with your current wishes.

Life Insurance Beneficiary: FAQ

Life insurance protects the beneficiary, not the policyholder. Here are answers to common questions about life insurance beneficiaries:

Can a life insurance beneficiary be changed after death?

You can't change a life insurance beneficiary after the policyholder dies.

What if your chosen beneficiary passes away before you do?

If your primary beneficiary dies before you and no contingent beneficiary is listed, the death benefit becomes part of your estate. This triggers probate, delaying distribution and making funds accessible to creditors.

Do life insurance companies contact beneficiaries?

Life insurance companies don't automatically contact beneficiaries. Beneficiaries must file a claim to start the payout process.

If the beneficiary doesn't claim the life insurance, the proceeds may be considered unclaimed property and turned over to the state.

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

The life insurance beneficiary designation takes precedence over a will. The policy's named beneficiaries receive the death benefit directly, even if a will states otherwise.

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 probate, a court process that oversees asset distribution. Probate is lengthy and costly and delays the death benefit distribution to your loved ones.

When the death benefit is part of your estate, creditors can access it. Outstanding debts get paid off using the death benefit, reducing what goes to your heirs.

About Mark Fitzpatrick

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!

He writes about economics and insurance, breaking down complex topics so people know what they're buying.

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What Is a Life Insurance Beneficiary: Definition, Rules & How It Works

Who Can Be a Life Insurance Beneficiary?

Types of Life Insurance Beneficiaries

Revocable vs. Irrevocable Life Insurance Beneficiaries