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What to Know About Life Insurance Beneficiaries

It’s never easy to deal with a loved one passing away. The grief and sadness can be overwhelming, and it’s physically and emotionally exhausting trying to manage logistics and practicalities at the same time.

Understanding life insurance and life insurance beneficiaries is important to ensure you’ll be ready to smoothly complete the process of claiming your benefits if and when the time comes.

Learn about how to name a beneficiary for your own life insurance policy, and what you’ll need to do if you are the primary beneficiary for a loved one who passes away.

What Is A Life Insurance Beneficiary?

A life insurance beneficiary is the person (or entity) whom you choose to legally receive the death benefit from your life insurance policy when you pass away. The death benefit is the payout from your policy.

It’s important to name a beneficiary because products such as life insurance are not usually controlled by your will. Naming a beneficiary ensures that the policy benefits will go to the people whom you want to receive them.

How to Name A Beneficiary

If you have purchased a life insurance policy, you can name a beneficiary by clearly identifying them using information such as their full name and their Social Security number. Your insurance provider will keep this information on file. If desired, you can change your beneficiary at any time.

You can name more than one beneficiary for your life insurance policy. You can also choose how much of the death benefit goes to each person. And your beneficiary doesn’t have to be a person — it could also be an entity such as a charity you care about.

Keep in mind that you should also name primary and contingent beneficiaries. Your primary beneficiary is the person or entity whom you most want to receive the death benefit. If they cannot be found, however, the benefit will fall to the contingent beneficiary — in other words, your second choice. As a last resort if the contingent beneficiary was not found, either, the death benefit will go to your estate. (The benefit also goes to your estate if you do not name a beneficiary.)

What to Do If You Are A Beneficiary 

If you are a beneficiary, you have a job to do when your loved one passes away. You won’t receive your payout automatically — you will need to file a claim to get the death benefit that you’re owed. You can use this money to replace lost income if the person who died (such as a spouse) helped pay your bills. Or use the payment to cover funeral expenses and other end-of-life expenses for the policyholder.

To file a claim, you’ll need a certified copy of the death certificate (and potentially other documents, like a claim form or a copy of the life insurance policy). Depending on the company’s requirements, you can submit your claim either online; over the phone; in person; or in the mail.

In your letter to the insurance company, state that you are looking for the documents you need to process a claim. Verify these are the only pertinent policies that the deceased may have had. Make sure to include: The policyholder’s name and policy number

  • Their cause of death
  • Your relationship to the policyholder
  • How you’d like to receive the money
  • Your contact information

You may be asked for additional documentation, such as proof of your identity, as your claim being is processed. Different insurance companies have different deadlines, but your payout should be quick after the claim goes through. Most death benefits are distributed either as a lump-sum payout (where you receive the entirety of the policy upfront) or in installments (like an annuity, which may be subject to taxes).

Sometimes a beneficiary may run into issues trying to claim their benefits. For example, if someone buys a life insurance policy and then passes away by homicide or passes away within two years, the insurer might need extra time to investigate the death and make sure everything was above-board. But generally, you should be able to receive your payout within no longer than 60 days.

Keep in mind, too, that as a beneficiary, you may also be responsible for tying up any loose ends in your loved one’s finances.

How Do I Know If I’m A Beneficiary? 

If your loved one has named you as a beneficiary, ideally they will have notified you of this before their death. (Likewise, if you’ve named someone as a beneficiary on your own policy, make sure to let them know.) Otherwise, once somebody notifies the insurance company that the policyholder has passed away, the company will typically try to track you down.

Ask aging parents or other loved ones to let you know if they have named you as a beneficiary. If so, you will need to collect information from them such as:

  • The name of the life insurance company
  • Their policy number
  • A copy of their policy

You’ll be glad to have this information on hand once the time comes.


Do I need life insurance? 

If somebody (such as a spouse or child) depends on you financially, then yes, you probably should have life insurance. If you pass away, your named beneficiary can receive a death benefit — the proceeds of life insurance. They’ll be able to use this money to pay for your funeral expenses or cover life expenses that your income had previously paid.

If I pass away, how will my beneficiary get paid?

Once you as the policyholder pass away, your beneficiary will need to file a claim so they can receive the death benefit as a lump sum or as an annuity.

If I file a claim as a beneficiary, how soon will my claim for death benefits be paid?

If you are a beneficiary and you file a claim using the correct paperwork (including a valid death certificate), you can likely expect your claim to be paid within 10 days.