Contingent Beneficiary
What Does Contingent Beneficiary Mean?
A contingent beneficiary is a party entitled to receive the proceeds or benefits of a life insurance policy if the primary beneficiary passes away before the insured. To be legally entitled to these rights, the contingent beneficiary must be designated by the insured in the insurance contract. Deciding who to list as primary and contingent beneficiaries is one of the main choices people make when choosing a life insurance policy, alongside coverage amount and policy length.
Insuranceopedia Explains Contingent Beneficiary
Naming a contingent beneficiary is advantageous because, under the Uniform Simultaneous Death Act, if a policyholder and beneficiary die within a short time of each other, it is presumed that the beneficiary died first. Consequently, if a contingent beneficiary has not been designated in the policy, the death benefit would go to the policyholder’s estate and be subject to division according to the terms of their will and any creditor claims. Naming errors and outdated designations are frequent problems for families collecting on a policy, which is why it helps to review common life insurance beneficiary rules before signing or after any major life event.
