Usually, a contingent beneficiary is generalized by a retired account owner or an insurance holder as the entity or person obscuring proceeds. Provided the primary beneficiary is no longer living or unlocated, it moves on to the contingent beneficiary.

It is entitled to retirement assets or insurance payouts only when some specific predetermined conditions get fulfilled at the insured’s death. In most cases, there is a will that points out the details of the beneficiary. 

How does this form of beneficiary work, and what are its attributes of Wealth Transfer? I know until now, your mind is stormed with such questions. So sit back and read the comprehensive guide which answers all your queries. 


What Is A Contingent Beneficiary All About? 

What Is A Contingent Beneficiary All About

In order to make you understand the various aspects of a contingent form of beneficiary, you must first know what we are talking about. For a will’s contingent beneficiary, no matter what conditions exist, the individual drafting the will is entirely responsible. In case the primary beneficiary says yes to inheritance, the contingent beneficiary will not receive anything. 

Take, for instance, Meghan lists her partner, Mike, as her life insurance policy’s primary beneficiary. Moreover, her two kids are her contingent beneficiaries. On the death of Meghan, Mike will receive the insurance proceeds while her kids won’t get anything. However, if Mike predeceases Meghan, the kids might receive the proceeds’ half shares.

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Differences Between Contingent And Primary Beneficiaries

Differences Between Contingent And Primary Beneficiaries

When it comes to inheriting assets dedicated to a dead person, primary beneficiaries deserve the first mention. Since these assets are different in nature, they might involve funds from a life insurance payout or living trusts. The primary beneficiary is usually the closest person, either a spouse, a family member, kids, or close relatives. 

On the other hand, a contingent beneficiary is considered secondary while distributing your assets. These are often close friends, relatives, or family members who are a bit distant. It can either be a philanthropic entity. While a primary beneficiary is just a single person, you can list multiple contingent beneficiaries and divide all your assets equally. 

For example, your spouse might be listed as your primary beneficiary, while your kids might be contingent beneficiaries. In case your husband/wife dies prior to you, the kids will receive a percentage of your assets right after your death. 

Various Aspects Of This Form Of Beneficiary 

Various Aspects Of This Form Of Beneficiary

A contingent beneficiary can either be an entity, people, charities, trusts, or estates. Pets or minor kids cannot qualify owing to their inability of legal authority for assigned assets. In case you find a will where a minor child has been listed as a contingent beneficiary, you might have to appoint a legal guardian. 

The latter will oversee the payout until the minor becomes an adult and can manage the money all by himself. Perhaps, it is common for family members, close relatives, and trusted friends to be contingent beneficiaries. Again, there might be multiple beneficiaries who can be listed on a retirement account or a life insurance policy. 

Every single beneficiary gets a specific portion of the money, thereby making upto 100%. Furthermore, a contingent beneficiary will acquire assets in a similar process provided for the key beneficiary. For instance, a primary beneficiary receives $1,500 every month for the next 10 years. Thus, the contingent beneficiary will also receive his payments in this manner. 

It is significant to review as well as update these beneficiaries when there are major life switches. Like a divorce, death, marriage, or even during birth. Again, consider Meghan and Mike getting a divorce. Mike keeps his life insurance policy updated so his first child becomes the primary beneficiary. Eventually, the second born becomes the contingent beneficiary. 

Stating Contingent Beneficiaries And Benefits Associated 

Stating Contingent Beneficiaries And Benefits Associated

A lot of unnecessary expenses and time can be saved if somebody names their contingent beneficiaries for their life insurance policy. The legal procedure of safely distributing the assets of a deceased individual is called probate, which works only if there’s no will. 

Take another instance of Emma, who lists Adrian as the primary beneficiary. Now, Adrian is the stepfather of Emma’s kids and is a charity beneficiary which is named for the kids. Even if Adrian predeceases Emma, her kids cannot claim the life insurance benefits. The reason is Emma listed the charity as the policy’s contingent beneficiary. 

A retirement account owner or an insurance policyholder might develop contingencies that avoid an inheritance without fulfilling specific qualifications. An IRA owner or individual retirement account can qualify his child as the contingent beneficiary without any rigorous paperwork. Further, they might put a restriction that the kid can inherit the money only after he turns into an adult. 

Here’s another significant consideration. The SECURE or the “Setting Every Community Up for Retirement Enhancement” Act in 2019 stated how non-spousal beneficiaries could receive 100% of the IRA funds. The last time period is the 10th year after the death of the IRA owner.

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While the process of attaining a portion of assets is easy might sound easy for a contingent beneficiary, there are other questions asked frequently. Check them out here as I answer them in the briefest way possible:

Q1. When Will I Be Required To List A Contingent Beneficiary?

Ans: You know you need to list down a contingent beneficiary/beneficiaries when you do not have a reliable primary beneficiary. Or when the latter is no longer living or unlocated. In order to save your assets from getting shattered after you die, be on the safer side and name a contingent asset beneficiary. 

Q2. How Many Beneficiaries Can I Name On A Contingent Basis? 

Ans: As mentioned above, you can list down as many beneficiaries as you want on a contingent basis. However, you might want to divide your estate in an unbiased way in your will. If you have no living person to add as a contingent beneficiary, you might add an entity or an organization.

Q3. What’s The Process Of Payout In This Form Of The Beneficiary?

Ans: No matter whether you set a primary or a secondary beneficiary, knowing the payout process is a must. The following is how the contingent beneficiary payout process works:
• On purchasing a policy, you might have to select at least a single contingent beneficiary along with the primary ones. Make sure to tip your beneficiaries whenever needed. 

• If you pass away when your policy is still active, ask your insurer to consult the primary beneficiary. he/she might take the help of the contact information provided by you.

• In case the insurer confirms that no primary beneficiary is living, the insurer navigates to reaching out to the contingent beneficiary. The ones living are likely to receive your will’s death benefit, as stated in the policy.


Like any other category of beneficiary, the contingent beneficiary provides ample benefits to the listed person. However, it is of utmost importance for the named entity or individual to go through each and every detail thoroughly. Failing to do this can ultimately make you vulnerable to serious losses. 

And it’s a wrap on your favorite article. But don’t get disheartened, as I will continue bringing some of the most enlightening guides for my readers. Until then, keep reading, keep commenting, and keep sharing this informative article with your contingent beneficiary friends.

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With an adept skill of curating content on multiple genres, Mony has harnessed success as a Content Writer quickly. Find her sharing profound thoughts and opinions on finance, insurance and lifestyle niches.

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