Who is referred to as a "beneficiary" in life insurance?

In life insurance, a beneficiary is specifically the individual or entity that is designated to receive the death benefit upon the passing of the policyholder. This designation is a crucial aspect of a life insurance policy since it ensures that the financial proceeds are directed to the appropriate party as outlined by the policyholder's wishes.

Designating a beneficiary can be a way to provide financial support to loved ones, pay off debts, or fund future expenses such as education or retirement. The individual or entity must be specifically named in the policy for them to be eligible to receive the death benefit, distinguishing them from other parties involved in the insurance process, such as agents or insurers. This understanding of the beneficiary's role is vital for both policyholders and those advising them, as it directly impacts the distribution of benefits and the overall purpose of the life insurance contract.