What is a beneficiary?

This is the person or financial institution (a trust fund, for instance) named in an insurance policy as the recipient of the funds in the policy, in the event the policyholder dies.

In addition to naming a specific beneficiary to receive the proceeds of your life insurance policy (permanent or term), you should name a secondary or "contingent" beneficiary, just in case you outlive the first beneficiary.

If there is no living beneficiary, the proceeds will be paid to your estate and have to go through probate proceedings, resulting in a possible delay before your family receives the money. If the proceeds go into the estate, these proceeds may be subject to estate taxes.

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