Glossary
Per stirpes designation, defined
A way of naming beneficiaries so that if one of them dies before the insured, that person's share passes down to their own children rather than being split among the surviving named beneficiaries. The Latin means by the branch: each family line keeps its share.
In practice
The alternative is per capita, where a deceased beneficiary's share is divided among the survivors at the same level and their children receive nothing. Neither is right or wrong; the question is whether the insured wants grandchildren to inherit a parent's portion. Many carriers' forms default to per capita unless the box is ticked, and some do not support per stirpes at all, which is a reason to name a trust for anything complicated. The wording should be checked against the will so the two do not pull in different directions. It applies to primary and contingent beneficiaries alike.
A worked example
Suppose a widow names her three children as equal beneficiaries of a $300,000 policy, per stirpes, and one son dies before her leaving two children. On her death each surviving child receives $100,000 and the late son's two children receive $50,000 each. Under per capita the two surviving children would take $150,000 each and the grandchildren nothing. Hypothetical figures.
Applies to: Life InsuranceWhole Life Insurance