beneficiary
Also called: ahli waris, beneficiary
The person named in the policy to receive life insurance benefits.
What it means
A beneficiary is the party entitled to receive insurance benefits when the insured dies or the covered risk occurs. In life insurance, the beneficiary is usually the spouse, child, or parent named in the policy. This designation must be clear so it does not cause disputes later. The insurance company pays benefits to the party listed, not automatically to all heirs.
Why it matters for families
A beneficiary designation that is not updated can cause benefits to go to a party who is no longer appropriate, for example a former spouse. Families also need to know that insurance benefits generally do not automatically become inherited assets, so the process can be different. Make sure the beneficiary's name and relationship are recorded correctly and updated when family status changes.
Example
Suppose a father names his wife as the primary beneficiary and his child as the contingent beneficiary. When the risk occurs, the benefit is directed according to that designation. The benefit amount follows the policy, not the family's estimate.
Common misunderstanding
Many assume the beneficiary is always the same as the heir under the law. The correction: the beneficiary is the party named in the policy, and that designation is what the company uses as the reference.