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What to Know About Contingent Beneficiaries for Life Insurance

Elderly couple and insurance agent

Life insurance is meant to protect your loved ones in the event of your passing. If you’ve only designated a primary beneficiary for your policy, your estate might not be as secure as you’d like. Designating a contingent beneficiary can help provide additional protection to ensure that your family and other cherished parties are well taken care of upon your passing.

Continue reading to learn about how contingent beneficiaries work for California life insurance policies. For answers to any questions or help with a life insurance claim denial, call an experienced California life insurance denial attorney for advice and assistance.

Primary vs. Contingent Life Insurance Beneficiary

When you obtain life insurance coverage, you designate one or more beneficiaries. Your beneficiaries are the parties that are entitled to receive your life insurance payout. You can choose one or more primary beneficiaries, meaning the people who are first in line for the benefits. People typically choose close family members or a trusted organization as their primary beneficiary or beneficiaries.

Under certain circumstances, however, the primary beneficiaries are unable to receive the life insurance proceeds. If the beneficiaries died before the policyholder, for example, then there are no primary beneficiaries to receive the insurance benefits. In order to account for such a situation, you can designate one or more “contingent” beneficiaries.

Your contingent beneficiary receives your life insurance proceeds if there are no primary beneficiaries available to receive the payout. They are basically your “backup” beneficiary. For example, your life insurance policy might state that your primary beneficiary is your spouse, and your contingent beneficiaries are your children. If you die before your spouse, they would receive the life insurance benefits. If your spouse dies before you, and you have not otherwise amended your policy, then your children would receive the life insurance proceeds upon your death.

What if There’s No Named Contingent Beneficiary?

A contingent beneficiary makes the process simpler and ensures that your life insurance proceeds go directly to the party of your choosing. If your beneficiary dies and you have no contingent beneficiary, or if all of your contingent beneficiaries have also passed away, then upon your death your life insurance proceeds would be paid to your estate. The life insurance payout would go through the probate process to be distributed among your living heirs.

It’s better to designate a contingent beneficiary and avoid the probate process. During probate, the life insurance payout would be subject to estate taxes (as part of your estate), and would even be reachable by your creditors. It could take months or longer to get to your heirs. It’s easier, faster, and cheaper to designate contingent beneficiaries so that you know where your life insurance payout is going upon your death.

Call a Knowledgeable California Life Insurance Denial Law Firm Today for Help Protecting Your Policy and Your Loved Ones

If your life, disability, or health insurance claim was wrongfully denied, or if you have otherwise been subjected to bad faith insurance conduct, fight for the coverage you are owed with the help of the skilled, successful Los Angeles insurance denial lawyers at Gianelli & Morris. Call for a free consultation at 213-489-1600.

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