Difference Between Beneficiary and Dependent

You may have come across the term’s beneficiary and dependant. And you probably assumed they mean the same. However, although mostly used as synonyms, they are quite different. Why should you differentiate the two? Most situations in life will either require a person to have a beneficiary while other people depend on others for various things. For instance, students are dependent on their education sponsors until they graduate in some territories. Also, various situations, such as life insurance require a person to have a beneficiary. Let’s discuss the differences between the two. 

What is Beneficiary?

This is a person, trustee, institution, estate entity who receives benefits from a benefactor. The most common case of a beneficiary is presented in a life insurance policy. The beneficiary will receive the payment after the death of the benefactor, in this case, the insured. 

Beneficiaries may be required to decide where the money goes after his or her death. However, if the primary beneficiary is not alive, the benefits are channelled to contingent beneficiaries.  

What is a Dependent?

This is a person who relies on another person for their primary source of income. However, this changes with jurisdictions. Dependents can be added to a person’s insurance plans such as medical, dental and even auto-insurance. 

In some locations, people who have dependents can claim tax benefits such as tax deductions. A dependent can be a child or a spouse. However, these have to meet various obligations. 

For instance, a dependent spouse must be publicly represented by law. Dependent children must be under the age of 21 years or mentally or physically incapable of supporting themselves. 

Similarities between Beneficiary vs Dependent

• Both get financial gains 

Differences between Beneficiary vs Dependent

Definition

A benefactor refers to a person, trustee, institution, estate entity who receives benefits from a benefactor. On the other hand, a dependent refers to a person who relies on another person for their primary source of income.

Receiver

While a beneficiary can anyone such as a person, trustee, institution, estate entity who is entitled to benefits from the benefactor, dependents are mostly children or a spouse. 

Beneficiary vs. Dependent: Comparison Table

Summary of Beneficiary vs Dependent

A benefactor refers to a person, trustee, institution, estate entity who receives benefits from a benefactor. On the other hand, a dependent refers to a person who relies on another person for their primary source of income.

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