Third Party Beneficiary
Categories: Retirement, Trusts and Estates
You buy life insurance. The principals for that contract are you and the insurance company. You sign the deal. They sign the deal.
However, you won't benefit. You'll be dead. The insurance company benefits a little (if they're running their business correctly), but, in the end, they're writing a check. The person that check is going to is the third-party beneficiary. They benefit from the deal, even though they aren't a part of the contract.
Life insurance offers the most obvious example of a third-party beneficiary. But the term applies to anyone who benefits from a deal and isn't one of the principals. Under some conditions, these third-party beneficiaries can also sue, if the contract isn't fulfilled.
So...you die. The insurance company just sends a letter to your estate that says "Sucker!" However, your niece was named the beneficiary. She was supposed to receive the life insurance check. She has the right to sue in order to collect, even though she wasn't a principal in the original contract.
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Finance a la shmoop.. what is a beneficiary? well in Latin, bene is
good so this is like a good place to catch fish...well close not [Old man fishing in the ocean]
really but being a beneficiary is good it means you get stuff like if you are
the beneficiary of weird uncle Al's will then you get his odd collection of hair
balls shaped like US presidents and thirty two thousand two hundred sixty [Uncle Al's will appears]
$9.32... in essence then you are the beneficiary of his will you are the one
set up to benefit by the death of someone who wanted to favor you with
their assets when they had you know passed on to the great beyond where hair [Uncle Al with white wings in heaven]
balls will fall....