One question that comes up fairly regularly in filling out a life insurance application is who should my beneficiaries be and what’s the difference between a primary and contingent (or secondary) beneficiary? A beneficiary is a person or entity entitled to receive the death benefits paid under a life insurance policy.  A beneficiary can be primary or contingent (or secondary).

If the primary beneficiary is alive when the insured dies, then the primary beneficiary receives the death benefit.  If the policyholder has named a contingent beneficiary, the contingent beneficiary will receive the death benefit only if the primary beneficiary is not alive when the insured dies.  One can name several primary and contingent beneficiaries and assign a percentage of the benefit to each.

If no valid primary or contingent beneficiary is living or exists when the insured dies, the benefits will be paid as follows:

• If the insured is also the policy owner, the benefits will be paid to the insured’s estate.

• If the insured is not the policy owner, the benefits will be paid to the policy owner or, if the policy owner is not alive or does not exist, the benefits will be paid to the policy owner’s estate.

The policy owner maintains the right to choose or change the beneficiary unless the policy owner makes an irrevocable beneficiary designation, such as in an irrevocable life insurance trust.