As Insurify’s home and pet insurance editor, Danny also specializes in auto insurance. His goal is to help consumers navigate the complex world of insurance buying.
Becky Helzer is an editor at Insurify. She loves helping writers express their ideas clearly and authentically. With a diverse background in editing everything from curriculum and books to magazine articles and blog posts, she’s worked on topics ranging from home finance, insurance, and cloud computing to the best tools for home improvement.
A proud graduate of Colorado State University with a degree in technical journalism, Becky lives in Fort Collins, CO, with her husband and their two spoiled rescue dogs.
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Life insurance provides financial support to your loved ones if you pass away. If the unexpected happens, a life insurance policy ensures money goes to your beneficiaries with minimal difficulty.
A beneficiary is the person you choose to receive your death benefit.[1] In some cases, your primary beneficiary may not be able to accept the death benefit due to death, refusal, or incapacity. In this case, the benefit will go to your chosen contingent beneficiary.
Here’s what you should know about contingent life insurance beneficiaries.
Contingent beneficiaries in life insurance
Contingent beneficiaries are also commonly referred to as secondary beneficiaries. If the primary beneficiary can’t or won’t receive the death benefit, a contingent beneficiary will receive the death benefit.
When you buy a life insurance policy, you’ll choose both your primary and contingent beneficiaries. Make your primary beneficiary the first person you’d like to receive your death benefit. Your contingent beneficiary should be the next person you want your benefit to go to if the primary beneficiary passes away or is unable to receive it for some reason.
Important Information
Naming contingent beneficiaries is crucial because it ensures your death benefit is passed on. Your primary beneficiary could pass away, be physically or mentally unable to receive it, or simply choose not to. Contingent beneficiaries are common in other types of insurance policies, inheritances, and even retirement accounts. They serve as a backup to ensure your money or assets go to your desired beneficiary.
Who needs a contingent beneficiary?
If you have a life insurance policy that has a primary beneficiary, it’s important that you name a contingent beneficiary. Ensuring you have a backup to receive the death benefit if your primary beneficiary can’t helps you avoid delays or confusion around who should receive your benefit.
Here are several reasons to name a contingent beneficiary:
Financial security: Contingent beneficiaries provide extra security for your loved ones, ensuring your death benefit gets in the right hands.
Avoids confusion: Naming a contingent beneficiary makes distributing your death benefit less confusing if your primary beneficiary is unable to receive it.
Peace of mind: Having a contingent beneficiary will give you some peace of mind knowing that your death benefit is secure if something happens to your primary beneficiary.
Who should you name as a contingent beneficiary?
A contingent beneficiary could be anyone you choose, but typically it’s a family member, friend, or charitable organization. It’s entirely up to you, the policyholder, to choose who you want to be your contingent beneficiary.
Common contingent beneficiaries include children, siblings, or other relatives who you believe could need financial support if you pass away.
How to choose a contingent beneficiary
Assess the following before choosing your contingent beneficiary:
Consider financial needs. Pick somebody you know would most need financial support if you’re no longer there for them.
Think about usage. Consider how your contingent beneficiary might use the death benefit and make sure it aligns with your values.
Adjust if necessary. As life goes on, re-evaluate your choice for your contingent beneficiary and make sure you’re still comfortable with it.
What happens if you don’t name a contingent beneficiary?
If you don’t name a contingent beneficiary and your primary beneficiary can’t receive your death benefit, the money will typically go to your estate. This means it’ll have to go through probate, a legal process that determines who should receive benefits.
The probate process can lead to delays, estate taxes, and extra legal expenses, reducing the value of the death benefit. Naming a contingent beneficiary provides extra protection to avoid this undesirable outcome.
Life insurance payouts to contingent beneficiaries
Life insurance payouts are fairly straightforward. Your insurance company will first reach out to the primary beneficiary. If they can’t receive the death benefit, the insurance company will next contact the secondary beneficiary. Your insurer may require a death certificate before it pays the death benefit, and it may request proof of identity from your contingent beneficiary to verify who they are.
Complications can arise if you forget to update your contingent beneficiary after a life change (such as a divorce or the death of the contingent beneficiary), if the contingent beneficiary is a minor, or if there are family disputes about eligibility. In some cases, the money may be held in trust while the issue is resolved, which can occasionally require court intervention.
How much life insurance costs
The cost of life insurance depends on numerous factors, including your age, gender, health, lifestyle, coverage amount, family medical history, and term length. Take a look at how much your age, gender, and coverage amount can affect your monthly premium.
Age/Gender
▲▼
Term
▲▼
Monthly Premium for $250,000 Policy
▲▼
Monthly Premium for $1 Million Policy
▲▼
25-year-old woman
30 years
$14.36
$34.50
25-year-old man
30 years
$17.03
$46.06
45-year-old woman
20 years
$33.09
$112.58
45-year-old man
20 years
$42.18
$145.12
55-year-old woman
10 years
$90.52
$329.63
55-year-old man
10 years
$117.74
$449.13
Source: Insurify partner SelectQuote provided these averages based on 20-year and 30-year term policies from one or more of the companies SelectQuote represents. Rates are for men and women in excellent health. Premiums may vary depending on individual health, issuing company, and other factors.
How to buy life insurance
Buying life insurance is a fairly straightforward process.[2] Follow these steps to get a policy:
1. Assess your needs
Evaluate whether you actually need life insurance. Think about your income, expenses, and any debts, and consider whether any dependents count on your income. If you decide you do, calculate how much coverage you need and choose a term length.
2. Pick a policy type
Decide whether you want term life insurance or whole life insurance. Whole life insurance is permanent and accumulates cash value, while term life insurance lasts for a set time and has no cash value.
3. Compare companies and quotes
Compare policies from at least three companies and their costs.
4. Choose an insurer
Pick a company that offers the coverage you need at an affordable rate. But don’t just choose the cheapest option. Make sure to read reviews before deciding.
5. Apply for coverage
You’ll need to fill out an application with your personal information and answer questions about your medical history.
6. Take a medical exam if necessary
Some insurance companies require a medical exam before you can buy a policy.
7. Review your policy
Review your policy carefully to make sure you understand everything it includes, then start making payments.
Contingent beneficiary FAQs
If you still have questions about secondary beneficiaries, this additional information below can help.
Who can be a life insurance beneficiary?
Anyone can be a life insurance beneficiary, including family members, friends, relatives, and business partners.[3] Life insurance beneficiaries can even be entities like charities, trusts, or businesses.
Can you have two primary beneficiaries?
Yes. You can have two primary beneficiaries. You’ll need to specify the percentage of the benefit that each beneficiary will receive to ensure the payout is divided correctly.
Should you make your child your primary or contingent beneficiary?
In most cases, you should make your child a contingent beneficiary rather than a primary beneficiary, as minors can’t receive benefits directly without a legal guardian or trust in place.
Can a friend be a contingent beneficiary?
Yes. A friend can be a contingent beneficiary. Make sure you choose someone you trust to receive your benefit if your primary beneficiary can’t.
What is the primary beneficiary rule?
The primary beneficiary rule states that the primary beneficiary is the first person in line to receive the death benefit, and that it’ll only go to the contingent beneficiary if the primary beneficiary can’t accept the benefit.
NAIC. "Want to Purchase Life Insurance? Here Are Tips to Help You Through the Process."
NAIC. "What to Know About Life Insurance Beneficiaries."
Danny Smith
Danny is a Brooklyn-based writer with a producer’s license for property and casualty insurance. A former editor at Insurify, he specializes in auto, home, and pet insurance. He works to translate his insurance expertise into digestible, easy-to-understand content for drivers, homeowners, and pet owners alike.
Danny has been a contributor at Insurify since March 2022.
Becky Helzer is an editor at Insurify. She loves helping writers express their ideas clearly and authentically. With a diverse background in editing everything from curriculum and books to magazine articles and blog posts, she’s worked on topics ranging from home finance, insurance, and cloud computing to the best tools for home improvement.
A proud graduate of Colorado State University with a degree in technical journalism, Becky lives in Fort Collins, CO, with her husband and their two spoiled rescue dogs.
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