You are in

Financial Education

What is the meaning of beneficiary?

DNBC Team DNBC Team

Mar 01, 2023

Table of Content

When it comes to finances, one term that you may come across is
“beneficiary.” This term is often used in the context of remittance, bank
accounts, insurance policies, and investments.

But what does beneficiary mean exactly? In this article, we will explore
the meaning of beneficiary in more detail.

What is the meaning of beneficiary?

In a simple way, a beneficiary is a person or entity receiving the
funds/benefits of a financial account, policy, or investment.

When it comes to this term, a beneficiary can take on many different forms.

For example, in a wire
transfer
,
the beneficiary is the person or company who will ultimately receive the
funds.

In a life insurance policy, the beneficiary is the person who will receive
the death benefit when the policyholder passes away.

In a retirement account, the beneficiary is the person who will receive the
account’s balance upon the account owner’s death.

So when you set up a bank account, insurance policy, or investment, you are
usually asked to designate a beneficiary. This is the person or entity that
will receive the money in the account or policy.

What is the meaning of beneficiary?


What is the meaning of beneficiary?

For example, let’s say you set up a life insurance policy. In this case,
you are the policyholder, and you would pay the premiums for the policy.

However, you would also need to designate a beneficiary. This is the person
who would receive the death benefit of the policy if you were to pass away.

Similarly, when you set up a bank account, you may be asked to designate a
beneficiary. This person would receive the funds in the account if you were
to pass away. This is known as a payable-on-death (POD) account.

It’s important to note that the beneficiary of a financial account, policy,
or investment is different from the account holder or policyholder.

The account holder or policyholder is the person who sets up the account or
policy and pays for it. The beneficiary is the person who receives the
benefits of the account or policy.

When you set up a beneficiary, it’s important to choose someone you trust
to manage the funds or benefits. You should also update your beneficiary
designation if your circumstances change.

For example, if you get married, divorced, or have children, you may need
to update your beneficiary information.

In some cases, you may also need to name a contingent beneficiary. This is
a person or entity who would receive the benefits if the primary
beneficiary is unable to do so. For example, if your primary beneficiary
passes away before you do, the contingent beneficiary would receive the
benefits.

In general, a beneficiary is a person or entity that receives the benefits
of a financial account, policy, or investment. When you set up an account
or policy, you should designate a beneficiary to ensure that your funds or
benefits go to the right person if something happens to you.

It’s important to choose someone you trust and to update your beneficiary
designation if your circumstances change.

[elementor-template id="23977"]

Or please contact DNBC

Email Email: [email protected]

Telephone Phone Number:

Note: The content in this article is for general informative purposes only. You should conduct your own research or ask for specialist advice before making any financial decisions. All information in this article is current as of the date of publication, and DNBC Financial Group reserves the right to modify, add, or remove any information. We don’t provide any express or implied representations, warranties, or guarantees regarding the accuracy, completeness, or currency of the content within this publication.