A beneficiary is a person or entity named by a policyholder in a policy of life insurance (whole life, term life, or universal life) to receive the death benefit. The beneficiary can be one person, two or more individuals, a trustee of a trust set up by the policyholder, a charity organization, or the estate of the policyholder. After the policyholder’s death, the beneficiary gets paid the face amount of the death benefit in a lump sum, or in another form offered by the insurance company.
Every life insurance policy should have two levels of beneficiaries: primary and contingent. If the primary beneficiaries can't be found after the death of the policyholder, the contingent beneficiaries should receive the death benefit. If neither primary nor contingent beneficiaries can be located, the face amount will be paid to the policyholder's estate.