What does 'beneficiary' refer to in life insurance?

What does 'beneficiary' refer to in life insurance?

• A. The policyholder's financial advisor
• B. The individual who receives the insurance payout upon the policyholder's death
• C. The insurance agent who sold the policy
• D. The trustee managing the policy's funds

Answer: (B)

In the context of life insurance, the term "beneficiary" specifically designates the individual or entity that is entitled to receive the insurance payout when the policyholder passes away. This payout is designed to provide financial support and security to the beneficiary, who could be a family member, friend, or even a charitable organization, depending on the policyholder's wishes outlined in the insurance contract. Understanding the role of the beneficiary is crucial for policyholders, as it involves planning for their loved ones' financial well-being and ensuring that the intended parties receive the benefits associated with the policy. The selection of a beneficiary is often a significant part of the policyholder’s financial planning strategy and can have lasting implications for their family's future.

In the context of life insurance, the term "beneficiary" specifically designates the individual or entity that is entitled to receive the insurance payout when the policyholder passes away. This payout is designed to provide financial support and security to the beneficiary, who could be a family member, friend, or even a charitable organization, depending on the policyholder's wishes outlined in the insurance contract.

Understanding the role of the beneficiary is crucial for policyholders, as it involves planning for their loved ones' financial well-being and ensuring that the intended parties receive the benefits associated with the policy. The selection of a beneficiary is often a significant part of the policyholder’s financial planning strategy and can have lasting implications for their family's future.