What is a beneficiary in a life insurance policy?

In a life insurance policy, the beneficiary is a person or entity that is specifically designated to receive the death benefit upon the policyholder's death. This designation ensures that the proceeds from the life insurance policy go to the intended recipient, helping to provide financial support or cover expenses as specified by the policyholder.

Choosing a beneficiary is an essential part of setting up a life insurance policy. The policyholder can name one or multiple beneficiaries and can also make changes to these designations throughout the life of the policy. This flexibility allows individuals to adapt their estate planning and financial arrangements to fit their changing circumstances.

The other options do not accurately represent the role of a beneficiary. The responsibility for paying premiums lies with the policyholder, while a financial advisor may assist in managing the insurance but is not designated to receive the benefits. Lastly, the insurance company is the entity that underwrites the policy and pays out the death benefit, but it does not serve the role of a beneficiary.