What type of beneficiary has the first claim to the death proceeds of a life insurance policy?

The primary beneficiary holds the first claim to the death proceeds of a life insurance policy. This is the individual or entity designated by the policyholder to receive the policy benefits upon their death. In the event of the policyholder's passing, the insurance company pays the death benefits directly to the primary beneficiary as specified in the policy.

While other beneficiary types exist, such as contingent and charitable beneficiaries, they assume their roles in different circumstances. The contingent beneficiary only receives the proceeds if the primary beneficiary is unable to collect, for instance, due to death before the policyholder. Therefore, the primary beneficiary's designation is crucial, as it clearly establishes who will receive the funds immediately upon the event of the policyholder's death.

Understanding this hierarchy is essential in life insurance, as it helps ensure that the intended recipient receives the financial support from the policy, fulfilling the policyholder's wishes.