Primary vs. Contingent Beneficiaries

There are a lot of things to think about before you purchase a life insurance policy, including what kind of policy you want, how much cash value you are looking for, how long the policy will last, and, not least of all, who will be the beneficiary of your policy, or the person who will receive your death benefit when you pass. What most people are unaware of is that there are two kinds of beneficiaries when it comes to life insurance policies: primary beneficiaries and contingent beneficiaries. It is important to understand the difference, how each works with the other, and if you can have both types on one policy. This will ensure that the right person receives your death benefit when the time comes.

Primary Beneficiary

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A primary beneficiary will receive death benefits first, and if they cannot, then a contingent beneficiary will.

Your primary beneficiary is the primary person that you select to receive your life insurance death benefit when you pass away. Typically this is your spouse or your children. You can choose more than one person as primary beneficiaries, as well as how you would like the death benefit divided amongst them.

Contingent Beneficiary

A contingent beneficiary, also known as a secondary beneficiary, is a person or persons you can add to your policy who would receive your death benefit if something happens to the primary beneficiary/beneficiaries. For example, if you choose your spouse as your primary beneficiary, but they pass away before you, your contingent beneficiary (for example, your children) will receive the death benefit. The contingent beneficiaries will receive the death benefit if the primary beneficiary is dead, cannot be located, or is considered legally incompetent and not able to receive the money.

Primary Vs. Contingent Beneficiary

It is always a good idea to have both types of beneficiary, especially since it doesn’t cost you anything to have multiple beneficiaries. This way, if something happens to your primary beneficiary before the death benefit is distributed, any issues between family members surrounding your benefits will be cleared up. Having a backup will also save your family from going through the court system and paying court fees in order to access your benefits. 

About Beneficiaries

You can name almost anyone as the beneficiary to your life insurance policy, including your spouse, children, siblings, parents, or even business associates. Just remember that if you do choose a minor as your beneficiary, they will not be able to receive the payout until they are of age. You can request that the money go into a trust or to a person who oversees the benefits on their behalf. 

You can also change your beneficiaries at any time. It is generally a good idea to review your life insurance policy and its beneficiaries when you:black and white picture of a ring being put on a woman's finger

  • Get married
  • Have children
  • Get divorced
  • Get more assets

Understanding the difference between contingent beneficiaries and primary beneficiaries is important to help your family prepare for the unexpected. You can choose multiple primary beneficiaries, as well as contingent beneficiaries, in case something happens to the primary beneficiary. This ensures that the death benefit is used properly and is not tied up in a legal battle due to confusion or lack of information. Make sure to check your life insurance policy regularly, and update it when needed. 

There are many different life insurance companies with different coverage options and prices, which is why it is important to compare all of your options. The best way to do this is by working with an agent who specializes in life insurance. We have provided the top life insurance companies in the nation below; each offers hassle-free assistance and the most competitive rates. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.