We often enjoy sharing our favourite things with our parents, spouse or siblings. Similarly, adding a beneficiary is like sharing your policy with your loved ones to ensure their future is financially secured in your absence. So, who is a beneficiary? It is the individual who will be entitled to receive the policy benefits when you are not around.
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Beneficiary is the person you legally name to receive the benefits from your life insurance coverage amount (or other financial accounts, such as funds from your bank account) after your demise.
Yes, in most financial contexts like insurance or banking, a 'beneficiary' is the one who is designated to 'receive' the funds or benefits. The term 'beneficiary' is the formal title for the receiver.
After the policyholder's death, the beneficiary is the individual who is lawfully entitled to make a claim and receive the life insurance sum assured. A common example of a beneficiary is the lawfully married partner of the insured. They can raise a claim and be eligible to receive the life insurance proceeds.
When trying to define ‘beneficiary’, one must note that there are two main types:
Primary Beneficiary: Your first choice to receive the assets.
Contingent Beneficiary: The secondary beneficiary who receives the assets when the primary beneficiary cannot.
You can name one or multiple beneficiaries on a life insurance policy. There is no strict maximum limit.
It is a value that allows you to split the life insurance payment among multiple beneficiaries by assigning a specific percentage of the total amount to each person.
The key rules around an insurance beneficiary include:
The person who purchases the policy must nominate the beneficiary
The beneficiary has no rights to the policy while the insured individual is alive
The financial proceeds generally pass directly to the beneficiary without going through any outside/additional/third-party legal processes.
Upon the policyholder's death, the beneficiary must file a claim with the insurer by submitting the death certificate and claim forms. Once verified, as per the life insurance claim process, the insurer disburses the sum assured as a lump sum, regular payouts, or other settlement option.
Yes, you can change your beneficiaries at any time during your lifetime. The process is usually simple and requires filling out a form from your insurer.
No. The beneficiary is locked in at the moment of the policyholder's death and cannot be changed by anyone after that.
Yes, you can name your minor child as a beneficiary. However, the funds may be held with a guardian until the minor reaches the age of majority (18 years).
There is no minimum age. A minor can be named a beneficiary, but the payout process involves additional legal steps to manage the funds on their behalf until they become an adult.
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