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What Is a Contingent Beneficiary?

John’s your everyday man. He has the house, the wife and kids, the reliable car—a typical middle-class life. He’s put together his will for who gets what. And in case something happens to him, he has life insurance so his family will be taken care of. His wife is the primary beneficiary to receive the life insurance money. But there’s one thing John is missing . . .

If John dies and his wife is unable to collect the life insurance money, who gets it? Who provides for the kids? Or if his wife dies before he does, what happens to the policy then?

In comes the contingent beneficiary.

John needs to list a second person to receive the life insurance money in case something happens to the primary beneficiary. This is the role of the contingent beneficiary. And you need to do the same as John. But don’t worry, it isn’t as complicated as it sounds. Here are a few things you should know . . .

What Is a Contingent Beneficiary?

Contingent beneficiaries are actually pretty straightforward. They’re simply someone who gets your assets or money when you die. But only if the first person you chose—the primary beneficiary—dies, can’t be located or is incarcerated. It’s kind of like a back-up plan for your back-up plan. Let’s say you wanted to give a gift to your brother but he’s no longer around. Instead of the money just sitting there, you purposefully pick another person for it to go to.


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Contingent beneficiaries can be spelled out in your will for items you want to give to people. They can also be added to retirement accounts, life insurance policies, or checking and savings accounts. They help prevent your estate getting mixed up in probate court. For instance, if you died, your life insurance policy would simply be paid out to the contingent beneficiary as opposed to having a court decide what to do with it.

What’s the Difference Between Primary and Contingent Beneficiaries?

The only difference between a primary beneficiary and a contingent one is that the primary is, you guessed it, first in line. They get the full payout. The contingent beneficiary won’t get a dime because their only role was to be a back-up. For you sports fans, it’s like a second-string player sitting on the bench. They only come in when the star player is injured.

How Does a Contingent Beneficiary Work?

Contingent beneficiaries don’t have to be family members. You can name friends, charities, trusts or any other kind of organization. It’s just not recommended to name minors since they won’t be able to claim the money until they are 18. And no pets allowed, because pets can’t access checking accounts.

You can also name more than one contingent beneficiary. So, if your primary beneficiary is your spouse, you could name your siblings as contingent beneficiaries. But how would the money get split between them? We’re glad you asked! You can split the money into percentages so it’s divvied up the way you want—50/50 or 65/35, etc.

And you can change beneficiaries if something in your life is different, or you’ve simply changed your mind about who gets what. They’re not set in stone.

How Do I Choose Contingent Beneficiaries?

First, check your will, your life insurance policies, retirement accounts and any other accounts. See if you already chose contingent beneficiaries and just forgot about it. If you did, and you’re comfortable with who you chose, great! You’re all set. Otherwise, update them to reflect your current life circumstances. Many times, all it takes is filling out a simple form.

Next, set yourself a reminder to check your beneficiaries every year. Life happens and you want to make sure the beneficiaries you’ve chosen still make sense.

Finally, if you don’t know how to pick your beneficiaries and need some tips on how to talk to people about this, get our free guide. It will walk you through exactly what you need to do to set yourself up for legacy success.

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

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