Primary and Contingent Beneficiary in Life Insurance

Primary and Contingent Beneficiary in Life Insurance

Primary and Contingent Beneficiaries

A Primary Beneficiary is the first named beneficiary and will receive the policy death benefit from a life insurance contract if still alive when the life insured dies. However, sometimes the beneficiary dies first, or dies with the life insured. Consequently, it is prudent to name a Contingent Beneficiary as a secondary beneficiary to receive the death benefit if the named beneficiary predeceases the life insured. A spouse is often the named beneficiary of a policy and the children and grandchildren as “contingent beneficiaries.”

Point to Remember:

If the policy owner did not name a contingent beneficiary and the primary beneficiary dies before the life insured, the insurance company will pay the death benefit to the policy owner, or to the estate of the life insured if the policy owner is the same as the life insured.


We at are experts in explaining the life insurance contract, beneficiary definitions etc etc. Please feel free to contact us at or at 1 416 509 2540. Please visit us for a no obligation quote or advice.


Life Insurance protects your estate from a tax liability

Life Insurance is a tax free benefit to the beneficiary and hence can provide liquidity to your estate and the tax free benefit could offset tax liabilities in the future. When the first spouse passes away, there is a tax free roll over of assets to the surviving spouse. However, when the second spouse passes away, there is a roll over to the next generation and that could result in a tax liability. Therefore, assets like stocks, bonds, investment real estate is subject to a capital gain tax where the gain from the initial cost base is only taxed by 50%…


Advantages of a named Beneficiary in a Life Insurance policy

  • The death benefit moves outside the deceased’s estate; therefore, it is not included in the value of the estate when calculating the probate fees….The death benefit moves quickly and directly to the beneficiary ( by law, within 30 days of proof of death), whereas estate funds could take six months to several years to be paid….


Life Insurance Contract : features and requirements

Requirements of a Standard Insurance Contract (Standard legal Contract)Need for a Valid Offer and Acceptance: The client initiates the insurance process by submitting the application. The insurance company decides whether it will offer the policy to the client and what premium will it require.  The client has the option of accepting or declining the offer.


Change of Beneficiary

The policy owner could change the beneficiary to the policy. There could be various reasons that could result in this decision to change the beneficiary. It is, however, important to note that the beneficiary to the policy is one who has an established insurable interest. In simpler terms, the beneficiary of the policy should be having a negative financial impact upon the death of the person insured…


Prepared by:  Aman Kapur

One Comment

  1. What happens in a situation where the Policy Holder names three beneficiaries: Brother (80% allotment) Friend 1 (10% allotment) Friend 2 (10%allotment); The brother predeceases. The Beneficiary Designation form signed by the Policy holder does not specify contingent beneficiaries. This same form does not specify how payout will occur in this situation, or at all. The Policy holder designates Brother’s children as combined 80% beneficiaries of her estate.

    Are there any case examples. Would the Friends 1 & 2 split the 80% intended for the brother, even though the policy holder intended only 10% to each Friend 1 and 2?

Leave a Comment

Your email address will not be published. Required fields are marked *