Naming Your Life Insurance Beneficiary

The beneficiary of your life insurance policy receives the proceeds of the policy upon your death. Choosing the beneficiary is most likely an easy task, but there are certain things you should keep in mind when you decide.


This page:

Defines your life insurance beneficiary.

Outlines potential considerations in choosing a beneficiary.

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Your beneficiary

The proceeds of a life insurance policy are distributed upon death to your chosen beneficiary. A life insurance beneficiary can be an individual, your estate, or an organization.

When designating a beneficiary, you should specifically name the individual and indicate the portion of the proceeds s/he is to receive.


There are few restrictions on whom you may name as your life insurance beneficiary, but some do exist: several states only allow you to choose a relative if you are bequeathing the proceeds to an individual; also, a minor can only be named as a beneficiary if a guardian is assigned to supervise the life insurance proceeds and the spending of them until the minor reaches adulthood.

Multiple beneficiaries

Multiple life insurance beneficiaries, like a single individual beneficiary, should be identified in the policy by name. There are no limits to the number of beneficiaries you can name.

If you do decide to allocate your death benefit to several individuals, we recommend you designate a percentage of the life insurance proceeds to each individual rather than a specific amount. It is typical to have your policy grow throughout its life, so specifying a percentage each beneficiary receives instead of a precise amount eliminates the need to correct the policy each time the policy's worth is adjusted.

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Changing your beneficiary

Remember to update the beneficiaries named in your insurance policy with every life change - such as marriage, divorce, birth of a child, or death of a beneficiary. Changing or adding a beneficiary is a simple process, if your policy allows you that freedom.

A "revocable beneficiary" can be changed at any time. You simply fill out a beneficiary designation form and submit it to your insurance company. They will update your life insurance policy with your requests.

An "irrevocable beneficiary" cannot be changed without the beneficiary's consent. If your irrevocable beneficiary refuses to sign a consent form allowing you to remove him/her from the policy, there is nothing you can do.

Contingent beneficiaries

Contingent beneficiaries are also named on your life insurance policy. A contingent beneficiary only becomes a beneficiary if your primary beneficiary dies. This is especially important in cases where you and your primary beneficiary die near the same time.

If you have no contingent beneficiary and your primary beneficiary is deceased, the proceeds pass to your estate and are subject to unnecessary taxes and fees. To avoid this, we strongly suggest taking a few minutes to add a contingent beneficiary to your life insurance policy.

Other considerations

Designating a beneficiary is typically pretty cut and dry. Since life insurance policies are usually purchased with a specific intention in mind - to protect a mortgage or an estate, for retirement or charity - you most likely already know whom you are choosing as a beneficiary. However, there are some disadvantages of which you may be unaware.

Choosing your estate as the beneficiary of your life insurance policy proceeds can be financially unwise. If your death benefit goes to your estate instead of an individual, it can be heavily taxed and your creditors can seize the funds to cover your debts.

Keep this in mind when you are drawing up your policy. If you want the proceeds of your life insurance policy to cover the expenses of settling your estate but want to avoid taxes and fees - make a relative the beneficiary and request the proceeds go to settling your estate.

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