If your primary beneficiaries can’t receive the death benefit from your life insurance policy for any reason, a contingent beneficiary may serve as a backup. Your contingent beneficiary might be a specific person, organization, or charity. Let’s take a closer look at what a contingent beneficiary is and how it works.
When you apply for a life insurance policy, you’ll be asked to name your primary beneficiary. The primary beneficiary will collect the death benefit if you pass away while your plan is still active. A contingent beneficiary, however, will be entitled to the benefit if the primary beneficiary has died, can’t be found, or refused the payout. They’re essentially a backup beneficiary that will benefit from your policy if the primary beneficiary can’t receive the payout.1
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Yes, you can name multiple contingent beneficiaries. For example, your spouse might be your primary beneficiary, and your children may serve as your contingent beneficiaries. If your spouse is unable to collect the death benefit, your children will each receive a portion of it. But it’s important to note that if your children are minors, they may not be able to access the funds right away. Instead, the payout may be held in trust until they become adults.1
If you don’t name a contingent beneficiary for your life insurance policy and the primary beneficiary can’t receive the payout, your estate may have to go through the probate process.1 Unfortunately, this comes with fees that can reduce the benefit you’ve paid for. The clearer you are about your intentions before you pass away, the better.
As long as the beneficiaries in your policy are revocable, you have the freedom to change your contingent beneficiary.2 If you get divorced, for example, you can replace your ex-spouse with someone else as your beneficiary.
A primary beneficiary is first in line to receive the payout from your life insurance policy. Typically, this individual may be someone very close to you, such as your spouse. Ideally, they’ll be the ones that benefit from your policy when you pass away. A contingent beneficiary, on the other hand, is second in line to collect the payout. This may be your child or even an organization that you care about.2
If you pass away and your life insurance policy is still active, the primary beneficiary will be able to file a claim and receive their payout. But if they don’t for any reason, a contingent beneficiary may take their place and inherit the death benefit instead. As stated, they’re your backup beneficiary, and can come into play if your primary beneficiary dies before you or chooses not to collect their payout.
You may name just about any person, organization, or business as your contingent beneficiary. Just make sure you do so when you first purchase a life insurance policy. As long as your life insurance company states your beneficiaries are revocable, you can always change them in the future. If you do choose a child, note that you’ll need to designate a trustee to manage the estate on behalf of them.
A contingent beneficiary isn’t required, but it’s a good idea to include at least one in your life insurance policy. Otherwise, your assets may have to go through the probate process if your primary beneficiary doesn’t claim them. Designating a contingent beneficiary can make the process of distributing your estate easier and give you peace of mind knowing that the life insurance payout will go to a person or entity you care about.
Ideally, your primary beneficiary will be the one to collect your life insurance payout. But if things don’t go as planned, a contingent beneficiary can serve as a good backup option. This can be any individual or organization you value and believe is worthy of the funds.
Aflac offers several life insurance plans that can help protect your loved ones financially upon your passing, such as term and whole life insurance. Start chatting with an agent to learn more about which type of life insurance may be right for you, and get a quote today.
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1 Bankrate - What are Contingent Beneficiaries? Updated April 18, 2023. https://www.bankrate.com/insurance/life-insurance/contingent-beneficiaries/. Accessed April 25, 2023.
2 LegalZoom - Contingent Beneficiary vs. Primary Beneficiary. Updated January 23, 2023. https://www.legalzoom.com/articles/contingent-beneficiary-vs-primary-beneficiary. Accessed April 25, 2023.
Coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, coverage is underwritten by American Family Life Assurance Company of New York.
68000 series: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. In New York, NY68100-NY68400. B60000 series: In Arkansas, Idaho, Oklahoma, Pennsylvania, Texas, & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Q6000 group whole life series: In Arkansas, Policy Q60100CAR. In Delaware, Policy Q60200M. In Idaho Policy Q60100CID. In Oklahoma, Policy Q60100COK. In Oregon, Policy Q60100COR. In Texas, Policy Q60100CTX. Q60000 group term life series: In Delaware, Policies Q60200C. In Arkansas, Idaho, Oklahoma, Oregon, Texas, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C. 65000 series: In Virginia, Policies ICC0965JTO & ICC0965JWO. B61000 series: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC18B61JWO & ICC18B61JTO.
Aflac Final Expense insurance coverage is underwritten by Tier One Insurance Company, a subsidiary of Aflac Incorporated and is administered by Aetna Life Insurance Company.
The life insurance policy described herein contains an optional Accelerated Death Benefits Rider that is intended for favorable tax treatment under Section 101(g) of the Internal Revenue Code. Aflac does not give legal or tax advice. Please consult with a qualified legal, tax, and accounting advisor before engaging in any transaction. In AR, AZ, ID, OK, OR, PA, TX and VA: Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22.
This is a brief product overview only. Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY or VA. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations and exclusions. For complete details, including availability and costs, please contact your local Aflac agent.
Content within this article is for informational purposes only and does not constitute legal, tax, accounting or medical advice regarding any specific situation. Aflac cannot anticipate all the facts that a particular employer will have to consider in their benefits decision-making process. This article contains a general overview and is not intended to portray any specific benefits or details of Aflac policies.
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