Glossary
Contingent beneficiary, defined
The backup recipient named on a policy, who collects only if the primary recipient has died or cannot be found when the insured dies. Without one, the proceeds go to the insured's estate and pass through probate.
In practice
The order is strict: the primary receives everything if alive; the secondary receives nothing unless every primary is gone. A couple commonly name each other as primary and their children or a trust as secondary, which covers a shared accident. Shares should add up to the whole at each level, and the form should say whether a deceased child's share goes to that child's children or is split among the survivors. Update the secondary name as carefully as the primary; a stale secondary is what sends money into probate.
A worked example
Suppose a mother names her husband as primary and her two children as secondary, half each, on a $250,000 policy. If she and her husband die in the same crash, each child receives $125,000 directly. If she had named only her husband, the $250,000 would have gone to her estate. Hypothetical figures.
Applies to: Life InsuranceTerm Life Insurance