What is a contingent beneficiary?

At some point during the life insurance application process, you will be asked to name primary and contingent beneficiaries. A question that our customer success team gets asked a lot at this point is: “What exactly is a contingent beneficiary, and how does it differ from a primary beneficiary?”

When you buy a life insurance policy, it’s important to list both primary and contingent beneficiaries. To help with the process, we asked Haven Life’s customer success team to share their best insights with us.

Primary versus contingent beneficiary

Think of a contingent beneficiary as your “alternate.” Essentially, when setting up your life insurance policy, you’ll designate a primary beneficiary (typically your partner), who will receive all death benefits if you, well, die. (There’s no way to sugar coat these things sometimes.)

Your contingent beneficiary would be your backup—this is the person who will receive those death benefits in the event that your primary beneficiary is unable to receive them.

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Why should I designate a contingent beneficiary?

Life is full unexpected outcomes. Selecting a contingent beneficiary is a prudent way to protect yourself and your loved ones from a number of “what-if scenarios,” such as your primary beneficiary not being alive at the time a claim is made.

Another reason you would want a contingent beneficiary listed is to avoid the death benefit proceeds becoming payable to the insured’s estate, where it may be subject to estate taxes and a delay in disbursing money. (Note: If you’ve already set up a living trust and/or have a will established this might not be an issue.)

How do I go about choosing a contingent beneficiary?

For many families, the choice is to designate a child or the person who would be the legal guardian of your children. If you don’t have children, consider a close family member or friend. If you would like to divide your benefits—for example, if you have multiple children—you can allocate a certain percentage of said benefits to each person.

Oh, and in case you’re wondering: Yes, you can name a charitable organization as a beneficiary, though you’ll likely want to talk to an insurance professional about how to set that up.

What is a common mistake people make when picking a contingent beneficiary?

People often list children who are minors, in which case they also need to name a custodian. The mistake some people make is naming a custodian who is also the primary beneficiary. This is not a suitable arrangement since the custodian would be deceased in order for this situation to come about in the first place.

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What is a common misperception about contingent beneficiaries?

Some people believe contingent beneficiaries automatically receive the funds if the primary beneficiary(s) is deceased. This isn’t quite true. If a primary beneficiary passes away after the insured on the policy, technically the funds are payable to the estate of the primary beneficiary since they were living at the time of the insured’s death. (There are scenarios where this may not be the case.)

How often should I review my beneficiaries?

People move. Relationships change. Life…happens. It’s a good idea to review your beneficiary(s) at least once a year to make sure it’s up to date. Remember, you can always change, add or remove beneficiaries. And if you don’t have a contingent beneficiary on your policy, consider adding one. You know what they say about peace of mind? You can never have too much of it.


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Louis Wilson is a freelance writer whose work has appeared in a wide array of publications, both online and in print. He often writes about travel, sports, popular culture, men’s fashion and grooming, and more. He lives in Austin, Texas, where he has developed an unbridled passion for breakfast tacos, with his wife and two children.

Haven Life Insurance Agency (Haven Life) does not provide tax, legal or investment advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or investment advice. You should consult your own tax, legal, and investment advisors before engaging in any transaction. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel.

Haven Term is a Term Life Insurance Policy (ICC17DTC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111 and offered exclusively through Haven Life Insurance Agency, LLC. Policy and rider form numbers and features may vary by state and may not be available in all states. In New York, Haven Term is DTC-NY 1017. Our Agency license number in California is OK71922 and in Arkansas, 100139527.

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