In insurance, what does the term "beneficiary" refer to?

In the context of insurance, the term "beneficiary" specifically refers to the entity designated to receive benefits from a policy. This could be an individual, a group of people, or an organization that is named in the policy to receive the proceeds, usually in the event of the policyholder's death or a specific insured event. Understanding the role of the beneficiary is crucial, as they are the ones who will benefit from the policy terms and coverage, whether it be a life insurance policy, health insurance policy, or any other type of insurance product with designated beneficiaries.

In life insurance, for example, the beneficiary receives the death benefit when the insured person passes away. This highlights the importance of clearly identifying and naming the beneficiary when establishing an insurance policy to ensure that benefits are distributed according to the policyholder’s wishes.