A life insurance beneficiary is the person or entity you designate to receive the death benefit when you pass away. You can name one or multiple beneficiaries and should always name a contingent beneficiary as a backup.
When you purchase a life insurance policy, you designate one or more beneficiaries who will receive the death benefit upon your passing. This is one of the most important decisions you make when setting up your policy.
You can name anyone as a beneficiary — spouse, children, parents, friends, trusts, charities, or your estate. You can also split the benefit among multiple beneficiaries in any percentage you choose.
Review your beneficiary designations regularly, especially after major life events like marriage, divorce, or the birth of a child.
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Life insurance works by paying a monthly or annual premium to an insurance company in exchange for a guaranteed death benefit paid to your beneficiaries when you die. The amount, type, and cost depend on your age, health, and coverage needs. Read more
Life insurance death benefits are generally not subject to federal income tax. Your beneficiaries receive the full payout tax-free. However, if the policy is part of a large estate, estate taxes may apply for estates exceeding the federal exemption. Read more
When you die, your beneficiary files a claim with the insurance company by submitting a death certificate. The insurer typically pays the death benefit within 5-10 business days. The money is paid tax-free and can be used for any purpose. Read more
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