What is a contingent beneficiary?
When you set up a life insurance policy, you’ll name someone to receive the death benefit payout when you die. This person is called a primary beneficiary. Every policy needs to have at least one primary beneficiary. But you should also name a contingent beneficiary — this is the person who collects your insurance payout if none of your primary life insurance beneficiaries can accept the money.
Naming a contingent beneficiary can protect your insurance proceeds from entering a lengthy legal process in probate court or being taken by creditors.
What’s the difference between primary & contingent beneficiary?
The primary beneficiary is the main person designated to receive the payout from your life insurance policy upon your death. You can list more than one primary beneficiary and designate how much of the payout each one of them will receive, but you must name at least one person.
The contingent beneficiary is the alternative person designated to receive the payout if none of the primary beneficiaries can receive it — either because they died, are unavailable, or refuse to accept the payout.
If the primary beneficiary is available to receive the payout, the contingent beneficiary won’t receive any money.
Naming a contingent beneficiary isn’t mandatory, but you should consider naming one.
If you don’t name a contingent beneficiary and your primary beneficiary can’t claim the death benefit, a judge will decide where the money goes. This process can take months, and it means your loved ones might not get the financial support you left for them.
Naming a contingent beneficiary can ensure that the proceeds from your life insurance policy will go to the people you intended.
→ Learn what happens if your beneficiary passes away before you
Who should be your contingent beneficiary?
Who you choose as a contingent beneficiary will depend on your intentions for the money from your policy. If both you and your primary beneficiary are deceased, consider how you want the money to be used and the person who can best carry out those wishes.
For example, let’s say you want the proceeds from your life insurance policy to go toward the care of your minor children.
Most people name their spouse as their primary beneficiary. If both you and your spouse die, you’ll want to name a contingent beneficiary who will use the money as you intended.
This could be your parent, sibling, or whoever would be your child’s legal guardian if both you and your spouse die.
Avoid choosing minor children as beneficiaries, since the insurer won’t pay out to anyone under your state’s age of majority — 18 in every state except Alabama and Nebraska, where it’s 19, and Mississippi, where it’s 21. [1]
If you’re unsure who to name as a contingent beneficiary, a trust or a charity can be good alternatives.
→ Learn more about choosing a life insurance beneficiary
How to name a contingent beneficiary
You can name a contingent beneficiary the same way you name a primary beneficiary — by listing them in your life insurance policy.
You’ll need to provide some basic details about each beneficiary, including:
Full name
Birthday
Relationship to you
Contact information
You can name more than one contingent beneficiary and designate each to receive a percentage of your death benefit, just as you would with primary beneficiaries.
Your policy may allow you to name people in other beneficiary tiers (tertiary, quaternary, and so on), but primary and contingent beneficiaries are enough for most people.
You can also change your beneficiary any time. It’s good to review your beneficiaries regularly, especially after major life events or if your estate planning strategy evolves, so you can correct contact information or change a beneficiary as needed.
The bottom line
Ideally, your primary beneficiary would never die before you, but life insurance is about safeguarding your loved ones from worst-case scenarios.
Designating a contingent beneficiary and keeping your beneficiaries up-to-date can save your loved ones from going through a lengthy and complicated probate process while grieving, and ensure your wishes are honored even after you’re gone.
Frequently asked questions
How does having a contingent beneficiary work?
A primary beneficiary receives the life insurance death benefit when you die. If your primary beneficiary can’t claim the death benefit, the money goes to your contingent beneficiary.
What would prevent your primary beneficiary from claiming the death benefit?
In almost all cases, the contingent beneficiary is only eligible to claim the death benefit when the primary beneficiary has died.
If the primary beneficiary murdered the insured person, is on death row, or has formally rejected the death benefit, the contingent beneficiary would be able to claim the benefit while the primary beneficiary is still living, but these cases are extremely rare.
Who should be your contingent beneficiary?
Consider who you’d want to receive the death benefit from your life insurance policy if both you and your primary beneficiary die. Most of the time, this will be a family member, but you can also name whoever you wish to care for your estate or your children’s guardian.
What happens if there’s no contingent beneficiary?
If you don’t name a contingent beneficiary, you’re putting your policy at risk of going to probate court.
If your primary beneficiaries die before you and you haven’t named a contingent beneficiary, then the death benefit will go to your estate. A judge will then decide who gets the money, but this process can take several months and cost a lot in legal fees.
Do you need to have a contingent beneficiary?
Technically, you’re not required to name a contingent beneficiary, but it’s highly recommended that you name at least one.
