What Does Beneficiary Clause Mean?
A beneficiary clause is a clause in an insurance contract that gives the policyholder the ability to name their own primary and secondary beneficiaries and to change these beneficiaries at any time. Beneficiary clauses are commonly included in life insurance contracts. These clauses help policyholders respond to changing circumstances in their lives.
Insuranceopedia Explains Beneficiary Clause
Life insurance policies stay with most policyholders for long periods of time. Over the course of their coverage, they might need to make significant changes to their beneficiaries listed. Imagine, for example, that a man names his wife as a beneficiary to his life insurance policy. If they subsequently get divorced, there is a good chance he will want to remove her as one of the beneficiaries to the policy. Moreover, if he remarries, he may want to add his new spouse and perhaps stepchildren to the policy. All of this is simple if there is a beneficiary clause in the contract.