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Primary vs. contingent beneficiaries

Mar 2, 2021 4 Minute Read

There’s a reason the term “beneficiary” sounds so much like “benefit.” In the simplest terms, your beneficiary is the person or entity that will benefit from your life insurance policy.

After all, life insurance is something you ultimately buy for others, not yourself. Your beneficiaries receive the money so they can cover financial needs, from daily expenses to saving for the future.

When you apply for life insurance, you might be asked to choose both primary and contingent beneficiaries. Giving careful thought to all your beneficiaries can help make sure the right people receive the payout and provide a backup plan if needed.

What’s the difference between a primary and contingent beneficiary?

Life insurance is something you typically hold for decades, and a lot can change during that time. Using different types of beneficiaries can help you direct the money where you want it to go, even if things change.

There are two main types of life insurance beneficiary, primary and contingent. Here’s how they break down:

  • Primary beneficiaries are first in line to get the money. You can name one primary beneficiary, like your spouse, or multiple primary beneficiaries, like your children. If you choose more than one person, you can decide how they should divide up the money.
  • Contingent beneficiaries, also known as secondary beneficiaries, are next in line to receive your life insurance money. You can name a single contingent beneficiary or multiple contingent beneficiaries. These people only receive the money if all primary beneficiaries have died, can’t be located, or are legally incompetent or otherwise unable to receive money. For example, if you named two primary beneficiaries and one contingent beneficiary and one primary beneficiary died, then the remaining primary beneficiary would receive the full payout.

Choosing a primary vs. contingent beneficiary

It’s a good idea to name both types of beneficiaries. For example, if you only named your spouse and you and your spouse both died in an accident, the life insurance policy would have to go through probate, which is expensive and takes a lot of time. It’s unthinkable, but it does happen.

Your beneficiary designation can be a person or an entity. For example, you can name your spouse, children, parents, siblings, business association, or even a charity.

When choosing your beneficiaries, keep in mind:

  • Minors can’t receive payout money (but the money can go into a trust or to a person who oversees the benefit on their behalf).
  • Selecting a charity or organization as a contingent can help make sure that your money goes to a cause you care about if your entire family passes away.
  • Let your beneficiaries know that you’ve chosen them so the money doesn’t go unclaimed.
  • Check all of your designations regularly and update them as needed, which is as simple as filling out a form with most insurance companies.

Still have questions?

We’re here to help. eFinancial works with top-rated life insurance companies to help you find the right coverage for you and your family. Call us or start your quote online today.


At eFinancial, our goal is to make life insurance simple, affordable, and understandable for everyday families. This content is intended for educational purposes only. Each post is carefully fact-checked, reviewed and updated regularly to ensure the information is as relevant as possible.