Summary of contingent beneficiary

A contingent beneficiary is the person who will receive an asset such as money when you pass away if the primary beneficiary is deceased.

A contingent beneficiary is also called a secondary beneficiary.

If the primary beneficiary is living, they will receive the asset and the contingent beneficiary receives nothing. If you have two primary beneficiaries and one is deceased, the money goes to the other primary beneficiary while the contingent beneficiary still receives nothing.

If you definitely want someone to receive part of an asset such as life insurance money, make sure to name them as a primary beneficiary. You can designate how the money should be divided up. You do not have to give equal shares to the beneficiaries, but the percentages have to total 100%.

Beneficiaries are used on life insurance policies, wills, investment accounts, trusts and other financial assets. It’s a crucial part of financial planning to name beneficiaries in order to avoid confusion about money and inheritances when you pass away.


Primary vs. contingent beneficiary

Can a child be a contingent beneficiary?

A child can be a primary or contingent beneficiary for life insurance, but a minor won’t be able to receive the money directly. They’ll have to wait until they are considered adults, which is age 18 in many states. To avoid this, a life insurance policyholder can set up a life insurance trust to benefit the child. The trust will receive the money and the trustee can support the child with it.

How many contingent beneficiaries can you have?

Depending on the asset, there may be a limit to how many primary and contingent beneficiaries you can name. For example, Fidelity has a limit of 50 primary and 50 contingent beneficiaries for its accounts. Haven Life puts a limit of 10 primary and 10 contingent beneficiaries on its life insurance policies.

How do I change a contingent beneficiary?

Financial institutions and life insurance companies will have “change of beneficiary” forms for changing primary and/or secondary beneficiaries. The form is often available online, or call customer service for the company.

If your primary beneficiary has died, it’s a good idea to update your beneficiaries.