In the context of life insurance, what does the term “beneficiary” generally refer to?

In life insurance, the term "beneficiary" specifically refers to a person or party designated to receive the death benefit from a life insurance policy upon the passing of the insured. When an insured individual dies, the policy’s benefits are paid out to the beneficiary, which could be a family member, friend, or even an organization. This role is crucial, as it determines who will receive the financial support that can help cover expenses or provide for dependents in the absence of the insured.

The other options do not accurately reflect the definition of a beneficiary. Ownership interest in a policy pertains to the policyholder, while the reference to a financial institution for loans relates to the practice of using a life insurance policy's cash value as collateral. Lastly, although a relative might have a role in managing funds, this does not capture the specific function of a beneficiary in life insurance.