Primary vs. Contingent Beneficiary: What’s the Difference?

For each account, you may be encouraged to name a primary and contingent beneficiary, but what’s the purpose in choosing two types of beneficiaries? You may be surprised to learn that they are very similar. A primary beneficiary is a person who will receive the benefits of the account for which they are named. For example, a primary beneficiary on your life insurance policy will be first-in-line to receive your benefits when you pass.

A contingent beneficiary is a person who receives the benefits if the primary beneficiary is unavailable or has passed. Essentially, they are the second-in-line for benefits. Let’s say you have a $100,000 life insurance policy with your spouse named as your beneficiary, but your spouse passes before or at the same time as you. On your life insurance policy, you listed your child as your contingent beneficiary. In this case, the $100,000 benefits will go to your child. The contingent beneficiary has no power until the primary beneficiary is unavailable.