Beneficiary

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Definition

In insurance, the beneficiary is the person or people entitled to receive the claim amount and other benefits of the insurance policy at the time of death of the policyholder or at the end of the policy term.

Description

The eligibility to get the claim benefits is determined either by the conditions in the policy papers or by other legal standards. When an insurance plan is issued, the policyholder should specify the name of the beneficiary. There are additional procedures for naming a beneficiary if the original beneficiary is no longer alive or does not meet the age limits at that time.

In most cases, the beneficiary would be the policyholder’s wife or kids. In other instances, it can be any kind of charity, your company, some other relatives in the family, or multiple beneficiaries.

Example

Rohit purchased a term plan with a policy term of 20 years. He declared his wife Sudha as the beneficiary under the policy. After paying the premium for 10 years, Rohit died. The insurance company paid the benefits to the beneficiary who in this case will be Sudha.

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