A contingent beneficiary is a person or entity named in an insurance contract or retirement account as the recipient of proceeds if the primary beneficiary is unable to receive them. The primary beneficiary may be deceased, unable to be located, or refuse the inheritance at the time when the proceeds are to be paid. A contingent beneficiary is entitled to insurance proceeds or retirement assets only if certain predetermined conditions are met at the time of the insured’s death, such as information found in a will.
Key features of a contingent beneficiary include:
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Backup beneficiary: A contingent beneficiary is essentially a backup beneficiary that will benefit from the policy if the primary beneficiary cant receive the payout.
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Multiple beneficiaries: Multiple contingent beneficiaries can be listed, with each beneficiary designated a specific percentage of the money, adding up to 100% .
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Review and update: Contingent beneficiaries need to be reviewed and updated after major life changes, such as marriage, divorce, birth, or death.
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No requirement: A contingent beneficiary isnt required, but its 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 doesnt claim them.
Contingent beneficiaries can be children, other family members, philanthropic organizations, or any other person or entity designated by the policyholder.
