Life Insurance

Do You Need A Contingent Beneficiary?

Mother and child sitting together
If you already have a life insurance policy or you plan to purchase one soon, it's vital to name at least one primary and one contingent beneficiary on your policy. It's equally important to understand the role of each and what happens to your life insurance proceeds in the unlikely event you pass away with no beneficiary named on your policy.

What is a contingent beneficiary?

A contingent beneficiary on a life insurance policy receives the death benefit if the primary beneficiary becomes impaired and passes away. Naming a contingent beneficiary helps ensure that the funds left behind are distributed as per your final wishes. 

Primary vs. contingent beneficiaries

Both primary and contingent beneficiaries serve the same purpose; however, there's a critical difference between the two. Primary beneficiaries are first in line to receive the death benefit on your life insurance policy if you pass away. Contingent beneficiaries are next in line to acquire the life insurance proceeds if the primary beneficiary can't.

To illustrate, suppose the primary beneficiary accompanies the insured on a trip, the plane crashes, and both don't survive. In that case, the contingent beneficiary can claim the death benefit. However, if the primary beneficiary survives, they are entitled to the funds.

Wonder how much coverage you need?
Our coverage calculator helps estimate how much coverage you need to protect your family.

Who should be a beneficiary?

Naming a beneficiary is a personal decision, but most policyholders choose their spouse, significant other, adult children, or close relatives as beneficiaries on their life insurance policies. Depending on your situation, it could also be sensible to designate your estate, trust, or company to receive life insurance proceeds. 

Or, if you don't have a relative or friend in mind to whom you'd like to leave the funds, you can name your favorite charity as a primary or contingent beneficiary. 

Quick note: Life insurance providers won't pay out death benefits to minors. If you have minor children or dependents who rely on your support, consider naming your spouse, a close relative, or a trust as the beneficiary instead. Or, you can appoint a legal guardian while you're still alive. That individual would manage the funds until your minor children or dependents reach the age of majority in your respective state of residence. 

How many beneficiaries are allowed on a policy?

You can generally name as many primary and contingent beneficiaries as you'd like. However, you'll need to specify the percentage of the death benefit each party would receive in the unlikely event of your death. 

For example, if you're married with two children, you can request that your spouse receives 50 percent and your children receive 25 percent each as primary beneficiaries. Or, you can designate your spouse as the primary beneficiary at 100 percent and your children as contingent beneficiaries at 50 percent, each. 

Should you designate a contingent beneficiary? 

It's vital to designate a contingent beneficiary on your life insurance policy. Otherwise, if the primary beneficiary cannot claim the funds, the death benefit will transfer to your estate. And the probate process is lengthy and sometimes costly.

Consequently, it could take months for your loved ones to receive life insurance proceeds. If you die owing creditors, any funds left over once the probate process is complete could be minimal. Plus, the judge will get the final say on who receives the death benefit. 

Ensure control of your assets

If it's been a few years since you've reviewed your life insurance policies, now's the time to do so. You may discover that it's time to reassess how much coverage you need, name new beneficiaries, or both. Or, perhaps you don't yet have coverage, but you'd like to start shopping for a policy because of a significant life change, like becoming new parents.

Either way, Ethos has you covered with affordable coverage options from top-rated carriers. You may qualify for one of two types of policies: 

  • Term life insurance: This type of policy provides $2 million in coverage if you're between 20 and 65 years of age. You can purchase a policy that's valid for 10, 15, 20, or 30-years. If term life coverage through Ethos doesn't quite fit your needs, there's a 30-day free look period (i.e. money-back guarantee). 
  • Whole life insurance: This policy is ideal if you're between 66 and 85 years old and you're seeking coverage for the rest of your life. You're guaranteed approval for a policy between $1,000 and $30,000, and there are no premium payments once you reach 100 years of age. Even better, the policy accumulates cash value over time as long as it remains intact.  

You can get a term or whole life policy through Ethos in minutes without having to undergo medical exams, blood tests, or speak to an agent. Just answer a few questions to view your coverage options and secure life insurance online. It's that simple. 

Get a free life insurance quote today to help secure your family's financial future.

Get your estimate in seconds.

Nicotine Use?
Adjust the coverage amount and term length to find a plan you like. Then apply online (with no obligations) and get your real rate.

The estimated monthly rate for this policy is:

Coverage amount
Term length
10 years
Please not that all prices quoted are subject to change, including due to underwriting.