A beneficiary is the person or entity you designate to receive the proceeds (death benefit) from your life insurance policy. You can name a single beneficiary or multiple beneficiaries: one person, two or more people, a business, a trustee, a charity or your estate. Should you elect to have multiple beneficiaries, you can decide how the proceeds will be split between them.

When naming beneficiaries, you should identify them as clearly as possible and include their social security numbers. This will make it easier for the life insurance company to find them and make it less likely that disputes will arise.

There are two kinds of beneficiaries: “primary” and “contingent.” The primary beneficiary receives the death benefit if he or she can be found after your death. Contingent beneficiaries receive the death benefit if the primary beneficiary is deceased or cannot be found.

If no primary or contingent beneficiaries can be found, the death benefit will be paid to your estate. In this case, probate proceedings could delay distribution of the benefit, and the resultant costs could diminish the amount available to your heirs. It is therefore advisable to specify how the benefits are to be handled if one or more beneficiaries have died or cannot be located.

As your life situation changes, so could your choice of beneficiary. Marriage, divorce or the birth or adoption of a child are all events that could cause you to change your initial selection. It is a good idea to regularly review your beneficiary designation in order to make sure your choice is still appropriate.