Main > Insurance Tips

Beneficiaries of Life Insurance. Why do I Need a Primary and Contingent?

Why is it important to list a primary beneficiary and a contingent beneficiary?

If there is no living beneficiary, the proceeds from life insurance coverage will go into your estate. If there are probate proceedings, it will delay the funds getting to family members. This could cause a financial strain on a family when trying to cover final expenses such as funeral costs.

In addition, the life insurance death benefit may be subject to estate taxes. Naming of beneficiaries, both primary and contingent, are important parts of purchasing life insurance. Pay special attention to how you word your beneficiary designations. If you specifically name children, for example, and have another child, that child will not receive any proceeds unless he or she is on the policy. In this case, you simply need to call your insurance agent and get any additional children, who are not listed, to be added.