The eligibility to receive claim benefits is determined by the conditions outlined in the policy documents or by legal standards. When an insurance plan is issued, the policyholder must designate the beneficiary. If the original beneficiary is deceased or does not meet age requirements, additional procedures for naming a new beneficiary may apply.

Typically, beneficiaries are the policyholder's spouse or children, but they can also be charities, the policyholder's employer, other family members, or multiple beneficiaries. For instance, Rohit selected his wife, Sudha, as the beneficiary when he bought a 20-year term plan. Upon Rohit's death after paying premiums for 10 years, the insurance company disbursed the benefits to Sudha as the designated beneficiary.