DEFINITION of 'Beneficiary Clause'

A beneficiary clause is a provision in a life insurance policy or other investment vehicle such as an annuity or IRA that permits the policy owner to name individuals as primary and secondary beneficiaries. The policy owner typically may change the named beneficiaries at any time by following the specifications defined in the policy.

BREAKING DOWN 'Beneficiary Clause'

The term beneficiary refers to the specification of the recipient of funds or other benefits as specified in a policy or trust. The beneficiary clause defines who this is; in other words, what individual(s) will benefit from the funds or other benefits from the policy holder or benefactor.

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