What Does Contingent Mean In Life Insurance?

A simple explanation of Contingent Beneficiaries of Life Insurance.

The word ‘contingent’ means backup. Your plan B.

But what does it mean in life insurance?

The word ‘contingent’ is associated with the word ‘beneficiary’ in the life insurance dynamic. A contingent beneficiary is basically your ‘secondary’ beneficiary. Here is all you need to know!

Insurance Beneficiary

There are two essential types of insurance beneficiaries: primary and secondary.

Whatever life insurance you choose, whether it be term life or whole life, there is guaranteed death benefit that is paid out to your beneficiaries. When you’re buying the policy, you are required to name your primary beneficiaries and contingent (secondary) beneficiaries as well.

How this whole scenario works is actually pretty simple.

When the policyholder dies, primary beneficiaries get the entire death benefit. If unfortunately primary beneficiaries die along with the policyholder, then the death benefit is inherited by contingent beneficiaries.

Difference between Primary and Contingent Beneficiary

This is common logic, really.

Primary beneficiaries are first in line and contingent beneficiaries are second in line.

When a policyholder is buying their life insurance, they can name whoever as their beneficiaries (spouse, children, siblings, institutions) and they can name more than one. There is no limit! The math kicks in here: the percentage divided should in the end equal 100%. We’ll see how the math works later in this article with a real life example.

Primary beneficiaries are unable to make a claim because:

  • They died with the policyholder
  • Can’t legally make a claim
  • Are disabled or impaired
  • Refuse and decline the offer

If either one of the above listed situations is true, then ONLY the death benefit is passed down to the contingent beneficiaries.

There is also an option of listing someone as the tertiary beneficiary- or someone third in line in case primary and secondary beneficiaries both are unable to make a claim. This is however a very rare situation, but is very much possible.

An example

Here is a real life example to explain how insurance beneficiaries work so that you have a better idea about all the rules and calculations.

Let’s say Tom is married and has three children, but also has a financially dependent sister who he also wants under insurance protection. When he goes to buy insurance, he lists down his primary and contingent beneficiaries. This is what the situation now looks like:

Person Relationship with policyholder Beneficiary level Percentage of Death Benefit
Amber Spouse Primary 50%
Caroline Sister Primary 50%
Sam Child Secondary 50%
Dylan Child Secondary 25%
Cole Child Secondary 25%

For the total insurance protection of $600,000, he has listed his spouse and sister as primary beneficiaries who will receive 50% each of the death benefit. And he has divided the death benefit between his three children (contingent beneficiaries), where one will receive 50% and the other two 25% each.

Now this happens:

  • Only Tom dies– Amber and Caroline will receive $300,000 each.
  • Tom and his spouse, Amber pass away– Caroline will receive the entire death benefit of $600,000.
  • Tom, Amber and Caroline die– Sam will get $300,000 and Dylan and Cole will receive $150,000 each.
  • Tom, Amber, Caroline and Cole pass away- Sam would get $400,000 and Dylan will receive $200,000.

Notice the difference? See how primary beneficiaries are first in line, and even if one of them is alive, the whole death benefit goes to them regardless of what percentage they were signed off for initially. It is AFTER all of the primary beneficiaries die, that contingent beneficiaries are able to claim the death benefit.

Can a Minor be a Beneficiary?

Legally, you are allowed to name a minor as beneficiary for the death benefit. However, the money won’t be granted to them until they come of age. The age limit is usually 18 or 21, depending on the State Law.

While it is allowed, most experts say it might not be a good idea to do so. There could be a lot of years waiting for the child to be eligible to inherit the money, instead, a trusted adult should be named beneficiary who would use the money for the child’s benefit after the policyholder dies.


The Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minor Act (UTMA) were proposed to protect the rights and procedures of gifts when they are awarded to minors. If the policyholder dies while the child is still very young, the Court will appoint a custodian of the inheritance until the child comes of age. This is done under the Act.

Now what happens is that the insurance company will transfer the death benefit to the custodian (by going through proper legal channels). The custodian then can use the death benefit on behalf of the minor and when the child reaches of age, the custodian will give the entire amount to the child.

Will Beneficiary Rights

Beneficiaries, whether they are primary or secondary, are given some legal rights by the State to proceed with claiming death benefit.

As a beneficiary you will be informed about the status just as soon as the policyholder dies. You can see the Will and read it after it has been made public. So if you demand to see it before it has been made a public document, the executor has the right to refuse.

Insurance beneficiaries and Wills go through a proper legal process known as ‘probate’ where the Will is authenticated in the Court of Law and deemed a true testament of the deceased person’s final words. An executor is the person held responsible to initiate the process of probate, supervise all other legal processes and the hereditary chain.

What problems can I face as a Will Beneficiary?

The process isn’t as smooth, there may be a lot of complications and problems that you may have to go through before you are granted the death benefit.

The first problem can be unnecessary delays in the probate process. You need to have the executor of the Will on board and make sure you get the process started.

Or, the delay can be done from the Court after you have applied for probate. There could be public holidays, other delays or simply that the case is too complicated for it to run smoothly and quickly even after probate is granted.

Moreover, there can be lack of information provided to you or the non-disclosure of accounts. Make sure that you read the Will carefully and ask for transparency in the whole process. You have the right to ask for any necessary information so make sure you do.

How long until I receive the death benefit?

Well, the process can be slow and exhausting.

If there are many beneficiaries involved under the line of inheritance, the process is bound to take longer. Even the amount of debts associated with the policyholder can take long. On average it may take somewhere between 6 to 9 months after probate has been granted, before then, you’re in for a lot of wait, legal complications and trips to the Court.


Death benefits may first be inherited by the primary beneficiaries, and if they are unable to or refuse to take claim of the money, then only contingent beneficiaries may have a claim. While appointing minors as beneficiaries is possible and legally allowed, they won’t be able to enjoy the benefit until they reach the proper age.

As a policyholder it is important to ask the ins and outs of appointing beneficiaries and all legal requirements from your insurance company and ask them the process of inheritance. Transparency of information is very important when it comes to life insurance and granting death benefits to beneficiaries!

Sandra Johnson

Sandra Johnson

Sandra Johnson was a few years out of school and took a job as a life insurance agent in California, selling coverage door-to-door for Prudential. The experience taught her about the technical components of insurance and its benefits for individuals and society, as well as the misunderstandings people often have about insurance. She has over ten years’ experience in the insurance industry, having worked as both a Broker and Underwriter, assisting clients across a broad range of industries. At Insurance Noon, Sarah diligently gathers all the required information and curates up pieces to provide meaningful insurance solutions. Her personal value proposition is to demonstrate a genuine interest in always adding value for clients.Her determined approach to guiding clients has turned her into a platinum adviser to multiple insurers.

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