What Is a Beneficiary?
Simply put the beneficiary is the person or entity that 'inherits' or gets the money after you die. Mostly a beneficiary is defined as the one (or more than one, or many), who are entitled to the benefit of a specified policy, named as the specific (and only) recipient(s), by the issuer, policy-holder, referred to in legal terms, as the cestui que use.
According to online and industry resources definitions, the one(s) stipulated and identified specifically by a benefactor, getting the money or assets, in this case proceeds from the life insurance policy, qualified and eligible by the terms of such a policy or plan, to receive benefits, money as per under the policy guidelines, is referred to as a beneficiary OR THE ONE(S) WHO BENEFIT, upon your death. When someone dies, as an insured or life insurance plan policy coverage participant, the beneficiary (a person, persons, group, business, or entity/institution, charity), are the stated party/parties of concern, covered under and entitled to whatever the policy stipulates.
This might pertain to some or all proceeds of money or property held by the current owner upon a specified event or condition. Life insurance policies, inheritances, annuities or trusts all state, name and clearly identify who this individual(s) are, by name and law. It can also be a trustee, spouse, child/children, parent, relative, or other named and identified, for this purpose.
There are different types of beneficiary categories and implications, like primary, preferred, secondary, contingent beneficiary, revocable or irrevocable, third-party and/or income beneficiary. The choice(s) you make here can have legal and tax implications, so be aware of them as far as possible PRIOR to assigning and specifying these. Also remember to review and confirm details and often re-evaluate it as your situation and circumstances change (getting married, having children, divorce etc.).
Other options:
- Another relative
- Charity
- Child/children (age matters! They will directly receive it for example, if/when they turn 18 or an age you specify, trustee will have to be appointed otherwise)
- Contingency beneficiary
- Family member
- Friend
- Your estate
- Your spouse
It is an important decision to think about and discuss, weigh your options, check the costs, administration and keep up to date. So, whichever needs and requirements you and your family have, its merits some careful consideration, whether you are including and covering, specifying your spouse, parent, offspring or grand-child (protected from creditors), sibling(s), distant relative, under-aged child with trustee and individual guardian. Also ensure that you are familiar with and checked out death benefits and taxation. Also probate fees and creditor claims need to be considered as well. Also include a clause of protection and stipulation if the beneficiary should die before you do! REMEMBER: changes can and have to be made to keep it current and binding.
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