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Do You Need a Contingent Beneficiary?

When you take out a life insurance policy, you need to decide who will get the policy proceeds (or death benefit) when you pass away. Many people make the mistake of leaving the beneficiary elections blank, which means that their death benefit must go to their estate and, therefore, through probate – often a long process. When you name the beneficiary of your policy instead of leaving that choice blank, the death benefit can be paid out immediately allowing your heirs the immediate use of much-needed money.

There are two types of beneficiaries you can name on your life insurance policy. The first is the primary beneficiary. The primary beneficiary is one who will receive the death benefit if they are still living after your death. The primary beneficiary is the ultimate person (or persons) who you want to receive the death benefit. In your mind, they are the highest priority for receipt of the benefit.

The next type of beneficiary you can appoint is a contingent beneficiary (or beneficiaries). The contingent beneficiary is the person (or persons) who receives your death benefit if the primary beneficiary dies before you do.

Many people believe that it is unnecessary to name a contingent beneficiary – I mean, after all, how likely is it you will outlive them? And if you do – you can just remember to change your primary beneficiary on your policy


December 17, 2010



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