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Contingent beneficiaries on a life insurance policy will only receive a payout under certain conditions, usually if the primary beneficiary is deceased or unwilling to accept a payout. For example, a policyholder might list their spouse as the primary beneficiary and their children as contingent beneficiaries. Other close relatives, friends or organizations may also be contingent beneficiaries.

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Key Takeaways

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Contingent beneficiaries are second in line to receive the death benefit from a life insurance policy.

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They only receive the benefit if the primary beneficiary is deceased, unable to be located or does not want the payout.

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Many people list close family members, friends or charities as contingent beneficiaries.

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What Is a Contingent Beneficiary in Life Insurance?

In addition to your primary beneficiary, you typically list a contingent beneficiary on your life insurance policy. That person or persons will receive a payout from your policy if the primary beneficiary has passed away, their location is unknown, or they do not want the funds.

Aside from people, you can list charities, nonprofits or other organizations as contingent beneficiaries. You can even list multiple beneficiaries if you want your death benefit to be split between several different parties.

For example, you might list your spouse as the primary beneficiary and your two children as contingent beneficiaries with a 50% split of the death benefit. If your spouse dies, your children will receive an equal amount of the payout.

Some common options for contingent beneficiaries include:

  • Children
  • Parents
  • Siblings
  • Other family members
  • Close friends
  • Charities
  • Nonprofits
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When choosing a contingent beneficiary, many people select close relatives, like their parents or children. But choosing a beneficiary is completely up to you. Your beneficiary doesn’t have to be related to you; choosing to name organizations like charities as your contingent beneficiary is also possible.

What’s the Difference Between a Primary and Contingent Beneficiary?

Put simply: The primary beneficiary is first in line to receive the death benefit of a life insurance policy, while a contingent beneficiary will receive the benefit only if the primary beneficiary is unavailable or declines.

Primary vs. Contingent Beneficiary

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Primary Beneficiary:

A primary beneficiary is the first named beneficiary on a life insurance policy.

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Contingent Beneficiary:

A contingent beneficiary is a secondary beneficiary who only receives a benefit if the primary beneficiary is not around. There can be more than one contingent beneficiary.

For example, an individual might list their spouse as a primary beneficiary and a charity of their choice as a contingent beneficiary. If their spouse is still alive when the policyholder passes away, they will receive the full death benefit.

On the other hand, if the policyholder’s spouse passes away before the policyholder, then the contingent beneficiary would be eligible for the death benefit when the policyholder dies. In this case, the charity would receive the death benefit.

How Do Contingent Beneficiaries Receive Life Insurance Policy Proceeds?

The contingent beneficiary receives the death benefit when the primary beneficiary is unable. They typically are only eligible for the benefit if the primary beneficiary passes away before the policyholder or if the primary beneficiary chooses not to accept the benefit.

Contingent beneficiaries receive funds in the same way as the primary beneficiary would and for the same amount.

When Can Contingent Beneficiaries Receive the Death Benefit?

There are several scenarios in which a contingent beneficiary may receive the death benefit. The most common is that the primary beneficiary has passed away.

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    Primary Beneficiary Predeceases the Insured

    One of the most common scenarios in which a contingent beneficiary receives the death benefit is if the primary beneficiary passes away before the insured.

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    Primary Beneficiary Cannot Be Found

    Contingent beneficiaries may be eligible for the death benefit if the location of the primary beneficiary is unknown.

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    Primary Beneficiary Rejects Death Benefit

    In some cases, the primary beneficiary may not want to receive the death benefit. For example, a parent may reject the death benefit so that it goes to their children, who are listed as contingent beneficiaries.

How to Make a Claim as a Contingent Beneficiary

The claims process for a contingent beneficiary is the same as if you were a primary beneficiary. However, in addition to the basic requirements, the contingent beneficiary must also provide the death certificate of the primary beneficiary when they make a claim.

What Happens if You Don’t Name a Contingent Beneficiary?

If you don’t name a contingent beneficiary and your primary beneficiary is unwilling or unable to accept the death benefit, then the benefit goes to your estate or nearest relative. Without naming a contingent beneficiary, you have less control over where the death benefit ends up, and it is subject to estate tax.

Who Should You Assign as Your Contingent Beneficiary?

You should use the same logic when choosing a contingent beneficiary that you do when choosing a primary beneficiary. Typically, the contingent beneficiary is someone close to you, often a family member, especially one who relies on you financially, or a close friend. However, you may also choose to list a charity or nonprofit as your beneficiary if your loved ones are already financially secure and you’d like your legacy to make a positive impact.

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    Your spouse or partner, if you have one, is likely your primary beneficiary. But if, for whatever reason, you have a different primary beneficiary, it’s a good idea to list your spouse as the contingent beneficiary.

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    Adult children are commonly listed as contingent beneficiaries after a spouse is a primary beneficiary. However, it can be more complicated to list minor children as beneficiaries since they require a financial custodian.

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    Close Relative

    You may choose to list a close relative, such as your parents, siblings, nieces or nephews.

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    Instead of listing a person as your contingent beneficiary, you could list your estate.

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    In some cases, you may wish to choose a charity as your contingent beneficiary. Policyholders may choose this option if they don’t have dependents who rely on their income and they want their legacy to have an impact.

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    You can list a trust as your contingent beneficiary. Depending on your situation, this may have estate planning advantages.

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    You can list an organization, such as a nonprofit, as a contingent beneficiary. Similar to listing a charity, listing a nonprofit can put your death benefit to good use in the world.

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Your contingent beneficiary can be whoever you want it to be, whether that’s a family member, a charity of your choosing or even a close friend. It’s a good idea to name a contingent beneficiary in addition to a primary beneficiary since it can help to speed up the payout process and ensure that your funds go where you want them to after your death.

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Frequently Asked Questions

Life insurance can sometimes be a little confusing. Here are some answers to common questions about contingent and primary beneficiaries.

About Margaret Wack

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Margaret Wack is a freelance writer who covers insurance, saving, investing, banking, and more. Margaret earned a bachelor's degree in classics, comparative literature, and poetry from Smith College and a master's degree from St. John's College.