What does it mean when a beneficiary is contingent?
In insurance contracts, a contingent beneficiary is one who benefits when the prior beneficiary of the policy is unable receive the benefit. In Texas, if a beneficiary of a life insurance forfeits one’s interest in the policy, the contingent beneficiary named by the insured can receive the proceeds.
What is the difference between a beneficiary and a contingent beneficiary?
The first person or organization you name to receive an asset is the primary beneficiary. A contingent beneficiary — sometimes called a secondary beneficiary — is the person or organization next in line to receive assets if your primary beneficiary isn’t able to.
Who should my contingent beneficiary be?
Although it’s more common for contingent beneficiaries to be immediate family members, close friends and other relatives are often listed as well. Multiple contingent beneficiaries may be listed on a life insurance policy or retirement account.
What happens if one of your contingent beneficiary dies?
If you have named more than one primary beneficiary, or if the primary beneficiary is deceased and you have more than one contingent beneficiary and one of them has died, then the death benefit proceeds from your policy will typically be redistributed among the remaining beneficiaries.
What happens if both primary and contingent beneficiary dies?
What happens when both primary and contingent beneficiaries die? In case all beneficiaries have died, the proceeds will be paid to the insured individual’s estate.
Can the same person be a primary and contingent beneficiary?
Can the Same Person be My Primary and Contingent Beneficiary? Naming the same person as both a primary and a contingent beneficiary is a common Estate Planning mistake. Since the contingent beneficiary is a back up, it’s important to not name the same person in both roles.
How do contingent beneficiaries work with multiple primary beneficiaries?
A contingent beneficiary is basically just your back up beneficiary. You will name primary beneficiaries for various parts of your Estate Plan, including accounts, investments and policies that are listed in your Trust or Will. Upon your passing, assets will be distributed appropriately per your direction.
How would a contingent beneficiary receive the policy?
How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy? A contingent beneficiary will receive the policy proceeds if the primary beneficiary dies before the insured’s death.
What would be an advantage to naming a contingent beneficiary?
Naming a contingent beneficiary may not be required when you purchase life insurance, but it can help make sure someone you care about receives your death benefit in case your primary beneficiaries no longer can.
Should my child be primary or contingent beneficiary?
In summary, a minor child should most often not be named as the direct (contingent) beneficiary on life insurance, annuities, POD accounts, CDs, IRAs and similar assets that can otherwise pass outside of your Will and the probate process.