Primary Vs Secondary Beneficiaries Life Insurance To Make A Better Decision

It isn’t always simple to decide who will be our beneficiary for our life insurance policy, right? Mostly, most of the life insurance beneficiary is a family member who is very close to use or the one that we trust more than others.

In life insurance, there is primary beneficiary and secondary beneficiary that every policyholder should know. That’s why, we offer you to learn primary vs secondary beneficiaries life insurance to help you understand them well. That is aimed to allow you to choose the right beneficiaries for your life insurance.

Now we can directly head to the review sections to know all the detailed explanation about the two kinds of beneficiaries along with the other related information that contribute to help you understand life insurance more.


Definition of Life Insurance Beneficiaries

Definition of Life Insurance Beneficiaries


In general, life insurance beneficiaries are the ones that would receive your death benefit when you are pass away. Though you may pass away, your policy is still active. This means that it is important to choose the right beneficiaries if you want to purchase a life insurance. In short, the beneficiary is the first thing to consider when you are thinking about to have life insurance.

However, determining who will be your beneficiary is not as easy as you think. There are state laws and policy guidelines that may affect or even restrict your options. Thus, before you sign on the paper, make sure you read the fine print well and be familiar with how your life insurance company manages your beneficiaries.


Who Are The Life Insurance Beneficiaries?

Before we understand more about primary vs secondary beneficiaries life insurance, let’s firstly know who can be your life insurance beneficiary. Well, anyone can be a life insurance beneficiary such as people, trusts and organizations. Commonly, they are also probably a person that is your spouse, multiple people that can be your children, a trust, your estate, a charitable organization and a legal entity just like your company.

There are always limitations on the number of beneficiaries you can name. So, if your policy has a limit on letting you choose the beneficiaries, you should be selective when it comes to compile your list.


Primary Vs Secondary Beneficiaries

Primary Vs Secondary Beneficiaries


What is the difference between primary vs secondary beneficiaries life insurance? Now we start reviewing the main topic which is about the primary and secondary beneficiaries. Basically, there are some types of beneficiaries that you need to know not only primary and secondary life insurance beneficiaries. Well, here are the details.


Primary Life Insurance Beneficiaries

Primary life insurance beneficiary means the first line of those who qualify to receive your death benefit when you pass away.


Secondary Life Insurance Beneficiaries

On the other hand, the secondary life insurance beneficiary, which is also called contingent life insurance beneficiaries, refers to those that will receive your death benefit if the primary beneficiaries also pass away.

Mostly, final life insurance beneficiaries can be named if they pass away before you. This way, you yourself will receive the money if they die.


Multiple Beneficiaries

There is also a term of “Multiple Beneficiaries” that can be both primary and secondary. This beneficiary option can be chosen depending on how much the pay out of each party will receive. For instance, if your primary beneficiary is your spouse, child or a local charity, you might need to allocate the death benefit 50% for your spouse, 30% for your child and 20% for the charity. This way, the percentage must be 100% regardless how you divide the life insurance payout among your beneficiaries. If you don’t make any percentage, the insurer may give you equal shares to each of your beneficiaries.


Irrevocable and Revocable Beneficiaries

Irrevocable beneficiaries cannot be designated without the approval of beneficiaries. In other words, your beneficiaries should agree to be named as irrevocable beneficiaries. That’s why, this kind of beneficiaries are rare. Nevertheless, they are useful of you want to ensure your death benefit to be given to a specific individual such as your child.

On the other hand, a revocable life insurance beneficiary can be designated flexibly. You can make any change, update, addition or even removal to revocable beneficiary whenever you want. This will grant you a freedom to customize the designation to fit your current needs.


How To Choose A Life Insurance Beneficiary

How To Choose A Life Insurance Beneficiary


Fortunately, we include the tips on how to choose a life insurance beneficiary in this primary vs secondary beneficiaries life insurance review. Well, making such decision is not that simple. You can take the right option but it is not the clearest option, though. So, you had better ask yourself some questions below before you name a beneficiary for your death benefit.

  • Who will financially rely on you and who would need a help to pay the ongoing bills if you pass away?
  • Who will need financial support to pay the cost of your death including the funeral expenses?
  • Who will leave money no matter whether they rely on you or not? A charity or a trust for your children?

When it comes to designate a life insurance beneficiary specifically, you can always avoid making simple mistakes. If you name your spouse or child, the insurer might not be clear who should receive the fund, particularly when you marry again or have more than one children.

In this regards, you should consider the identifying factors like the full name of each beneficiaries, social security number, date of birth and address as well as their relationship to you. This will allow the insurer to quickly determine your beneficiaries. Well, for a better decision, you may consult with a legal professional to ensure your decision making.

If only you knew, once you limits your choices, you should ask yourself how much money that each of your beneficiaries will need. This is aimed to let you to divide the death benefit based on their needs.


Name Your Children As Your Beneficiaries

Name Your Children As Your Beneficiaries


What if you name your children as your beneficiaries of your life insurance? It makes sense. However, if you pass away while they are still too young, they cannot receive your death benefits unless they are reaching 18 years old. In fact, it is too frustrating to delay especially when your children need the death benefit to fund their daily living expenses.

Well, no worry about it! There is a solution over such problem. Your children can receive your death benefit though they are before 18 years old. Consider the rules below:


Appoint A Guardian

Legal guardians are allowed in many states. They can receive the payouts on behalf of your children. So you can appoint a legal guardian before your death. Optionally, the guardian can make a right petition just after you pass away.

In either case, the guardian will be granted with the legal rights to handle the children’s finance. This way, the process of appointing a guardian can be expensive and long. Therefore, consulting with a lawyer is a good idea.


Establish A Trust

Another effective solution to take is establishing a trust to leave money to your children. This way, you can set up a life insurance trust for your children and ask the trustee to oversee the funds. Then, he/she can distribute the money based on your expectation.

However, establishing a trust is costly. The trust must be active and valid when you are passing away.


Naming Your Estates As Your Beneficiaries

Though the life insurance income is not generally taxable, the payout can be subject to estate if it was left as part of the big inheritance. Even if you have an expectation, your estate can get held up in validation court, postponing the pay out and costing your estate money.

So if you name a particular beneficiary on your life insurance policy, the money will be given directly to your beneficiary without being wrapped up in the estate.

Well, naming your estate is not a bad choice, however, you need to ensure that you take all of the estate tax and inheritance implications into consideration before you choose it as your beneficiary. One thing to remember, if you want to find the right life insurance plan for you, make sure you and your spouse are covered.


What If You Don’t Name Any Beneficiary?

In addition to understanding the primary vs secondary beneficiaries life insurance review, a big question may spring up on your mind; what if you don’t name any beneficiaries?

Unfortunately, if you don’t name any beneficiary, your death benefits will be issued to your estates. But in some cases, the insurers will grant the death benefit based on the particular order listed in the policy. This way, you can personally choose who would be your beneficiary based on the order.

If you live in a community property at which you and your spouse are considered to have equal possession of assets, your life insurance payout will be received automatically to your spouse no matter whether or not you have named a beneficiary. To claim this, give your spouse a written consent to the named beneficiaries before you pass away.

In this regards, states that have community property laws are California, Idaho, Arizona, Louisiana, New Mexico, Texas, Nevada, Washington and Wisconsin. If you join the community property and follow the rules of the laws when you get married, your spouse can be your beneficiary.


What If You Change, Add and Remove Beneficiaries?

Is it possible to change, add and remove the beneficiaries? Why not? The beneficiaries can be changed, added or even removed from the life insurance any time. The way of doing so varies from one insurance company to another. However, some life insurance companies will require a witness signature while others need only an online update.

The right times to change beneficiaries in life insurance are when you are getting married so you can add your spouse to your beneficiary when you get divorce so you can remove your spouse as your beneficiary, when you have children, when your children don’t rely on you financially anymore and when your beneficiaries pass away so you can edit your options.

In order to understand fully the beneficiaries’ life insurance and to learn what to do with the death benefit after receiving it, ask your beneficiaries to learn how to make a life insurance claim. This is aimed that they will be able to prepare for managing the finance if you die.



All in all, primary vs secondary beneficiaries life insurance is a must to learn in order to know which of your family members that you will name as your beneficiaries. Will your spouse be your primary beneficiary and your children be your secondary ones? All is your choice. The primary beneficiary is the one that will receive your death benefit in the first line up while the secondary one will be the one after the primary beneficiary.

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