Who is considered a beneficiary in a life insurance policy?

In a life insurance policy, the beneficiary is the person or entity designated to receive the death benefit upon the insured individual's passing. This selection can include individuals such as family members—like a spouse or children—or entities like trusts, charities, or businesses. The primary function of naming a beneficiary is to ensure that the death benefits are directed to a specific party, which aligns with the policyholder's wishes and provides financial support to those they care about after their death.

In contrast, the insurer is the company that underwrites the policy and assumes the risk, the agent is the person who facilitates the sale of the policy but does not stand to benefit from it, and a financial institution may hold the policy as collateral for loans or investments but is not involved in the disbursement of the death benefits unless designated as a beneficiary.