Life insurance applications allow you the ability to name one or more primary beneficiaries and contingent beneficiaries.

Most people are not quite sure who to name as their contingent beneficiaries.

In this post, I will help you determine who you should name as the contingent beneficiary; any rules that apply to doing so, and also give advice for special circumstances such as who you should name as contingent beneficiary if you are married with minor children.

Who should I list as my contingent beneficiary?

This question is more easily answered if you start with who you should name as your primary beneficiary.  Most people will name their spouse, children, or other relatives as their primary beneficiary.

Sometimes the primary beneficiary is a business partner or lender to whom you owe money.  However, while most of our clients know exactly who needs to benefit primarily financially from their death, sometimes it takes a little thought to decide who the funds should go to if the primary beneficiary(ies) is/are no longer living.

The most common scenario is in a family where you purchase insurance for yourself with your spouse as the primary beneficiary.

That is typically purchased because you are working, earning and income and if – god forbid – something happens to you, you want your spouse to have some funds available to either pay off bills, replace some of the income that would be missing in your absence and so on; so in this case, most people will leave their child or children as the contingent beneficiary, and here is what would happen:

If you were to pass away with your spouse living of the primary beneficiary, your spouse would receive the death benefit.

However, if your spouse were to predecease you or let’s say you were both killed in an accident simultaneously, then the contingent beneficiary/beneficiaries would receive the life insurance proceeds.

If a trust is present – meaning if you have a family trust or a living trust, most attorneys suggest leaving your trust as the secondary beneficiary.  The reason that is because you have already made determinations in your trust about how the trust funds will be distributed upon your passing.

Also, many trusts have asset protection features which make the trust a great choice for the contingent beneficiary if you have one.  If you don’t have one, most people will choose their children or other relatives.  If those are not available, some people will choose their favorite charity, church, or place of worship.