Secondary Beneficiary

What Does Secondary Beneficiary Mean?

A secondary beneficiary is an individual designated to receive the benefits of a life insurance policy, trust, or will if the primary beneficiary dies before the assets can be transferred to them. Many people designate secondary beneficiaries to ensure their assets have a recipient even if their first choice is unavailable. There are specific rules around naming life insurance beneficiaries, and overlooking them is a common cause of payouts going to the wrong person.

Insuranceopedia Explains Secondary Beneficiary

Life insurance death benefits often hold significant value. If the primary beneficiary dies, a named secondary beneficiary can inherit a substantial sum. The term “secondary beneficiary” is often used interchangeably with “contingent beneficiary.” For a secondary beneficiary to receive the benefits, the contingency is simply the death of the primary beneficiary. When that happens, the secondary beneficiary files the claim and goes through the same process for collecting life insurance as a beneficiary. Naming a secondary beneficiary is optional but can provide additional assurance for the distribution of assets.