Primary vs. secondary beneficiary? Primary vs. contingent beneficiary? Secondary vs. contingent beneficiary? What does this mean? This guide will cover the basics and differences between a primary beneficiary, a secondary beneficiary, and a contingent beneficiary.
This applies to life insurance, annuities, IRAs, and more.
What is a Primary Beneficiary?
The primary beneficiary is the person or entity with the first claim to inherit your assets after your death. You can name as many primary beneficiaries as you want and designate how they will receive their share of the asset following your death if the death benefit equals 100% of the total assets.
What is a Contingent Beneficiary?
What happens if the primary beneficiary dies before the insured dies? A contingent beneficiary (also known as the secondary beneficiary) is the second in line to inherit your assets – if any, described in your will, retirement account, or annuity. If the primary beneficiary or beneficiaries die before the inheritance is claimed, the contingent beneficiary will inherit the death benefit.
For example, you name your spouse the designated primary beneficiary and the children the contingent beneficiary. If your spouse dies before you, the children will inherit the assets.
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Frequently Asked Questions
What is a primary beneficiary?
A primary beneficiary is a person or entity first in line to receive benefits from a policy, plan, or estate. The primary beneficiary has precedence over all other beneficiaries.
What is a contingent beneficiary?
A contingent beneficiary is a person or entity next in line to receive benefits from a policy, plan, or estate if the primary beneficiary dies or is otherwise unable to collect. The contingent beneficiary only receives benefits if the primary beneficiary cannot.
What are the rights of a beneficiary?
Beneficiaries have the right to information about the policy, plan, or estate they receive benefits. They also have the right to change their status as a beneficiary and waive their rights if they so choose.
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