Beneficiary

A beneficiary is an individual or legal entity designated to receive proceeds from an insurance policy upon the insured’s death. Policyholders can name primary beneficiaries (such as spouses or children) and contingent beneficiaries (like siblings or charities) for life insurance policies.

Beneficiaries claim benefits by submitting a death certificate and a completed claim form to insurers such as State Farm or Allstate. Designations of beneficiaries override will instructions under ERISA-governed employer-provided life insurance plans, as confirmed in Supreme Court rulings like Egelhoff v.

Egelhoff. Multiple beneficiaries may split proceeds by percentage, such as 50% to each child, or by specific dollar amounts.

Minors named as beneficiaries require legal guardianship or trust arrangements since insurers like Prudential cannot pay directly to minors. Policyholders must update beneficiary information after major events, including marriage, divorce, or childbirth, because outdated designations remain legally binding until changed in writing, per YourInsurance.info.

Revocable beneficiary status allows policyholders to modify recipients without consent, whereas irrevocable status–often used in divorce settlements–requires beneficiary approval to alter designations. Insurers require Social Security numbers and birth dates to identify beneficiaries and prevent fraud during payout processing.

If all named beneficiaries predecease the insured, proceeds pass to the estate unless a backup (contingent) beneficiary exists. Taxes on payouts generally do not apply to life insurance beneficiaries unless the benefit generates interest income reported on IRS Form 1099-INT.