Choosing beneficiaries is one of the most important decisions you'll make when setting up life insurance. The beneficiary designation—not your will—determines who receives the death benefit directly from the insurance company.
Types of Beneficiaries
Primary Beneficiary
Your primary beneficiary is the first in line to receive the death benefit. This is typically a spouse, partner, child, or other loved one. You can name one or multiple primary beneficiaries and specify what percentage each receives.
Contingent (Secondary) Beneficiary
A contingent beneficiary receives the death benefit only if your primary beneficiary cannot—for example, if they passed away before you, cannot be located, or refuse the benefit. Think of them as your "backup" beneficiaries.
Michael names his wife Sarah as primary beneficiary (100%) and his two adult children as contingent beneficiaries (50% each). If Sarah is living when Michael passes, she receives the full death benefit. If Sarah passed away before Michael, the benefit would be split equally between their children.
Who Can Be a Beneficiary?
You have flexibility in who you can name:
- Individuals: Spouse, children, parents, siblings, friends, anyone
- Minors: Children under 18 (requires special consideration—see below)
- Trusts: A living trust or testamentary trust you establish
- Charities: Non-profit organizations
- Your estate: Generally not recommended (see common mistakes)
- Business entities: Corporations or partnerships (for business insurance)
Naming Minor Children
If you name a minor child as beneficiary, insurance companies cannot pay the benefit directly to them. The court will appoint a guardian to manage the money, which can take time and money. Better alternatives:
- Name a trusted adult as beneficiary who will use funds for the child
- Establish a trust and name the trust as beneficiary
- Use the Uniform Transfers to Minors Act (UTMA) custodial designation
Per Stirpes vs. Per Capita
When naming multiple beneficiaries, you can specify how the benefit should be distributed if one beneficiary dies before you:
Per Stirpes ("By Branch")
If a beneficiary dies before you, their share goes to their children (your grandchildren). This keeps the benefit within that family line.
Per Capita ("By Head")
If a beneficiary dies before you, their share is divided equally among the surviving beneficiaries. Their children do not inherit their share.
You name your three children (Ann, Bob, Carol) as equal beneficiaries per stirpes. If Bob passes away before you but has two children, his 33.33% share would go to his two children (16.67% each). Ann and Carol still receive their original 33.33% shares.
Revocable vs. Irrevocable Beneficiaries
Revocable Beneficiary
The standard option. You can change the beneficiary at any time without their permission. Most individual life insurance uses revocable beneficiaries.
Irrevocable Beneficiary
Once named, you cannot change or remove this beneficiary without their written consent. This is sometimes required in divorce agreements or used in business situations. It gives the beneficiary a vested interest in the policy.
Review your beneficiaries after major life events: marriage, divorce, birth of a child, death of a beneficiary, or significant changes in relationships. Many people forget to update beneficiaries, leading to unintended consequences—like an ex-spouse receiving the death benefit.
Common Beneficiary Mistakes to Avoid
- Naming your estate: This subjects the benefit to probate, delays, costs, creditors, and potentially higher taxes
- Outdated beneficiaries: Ex-spouses, deceased individuals, or people you're no longer in contact with
- Not naming contingent beneficiaries: If your primary beneficiary cannot receive the benefit, it may go to your estate
- Vague descriptions: "My children" instead of naming them specifically can cause disputes
- Naming minor children directly: Creates court involvement and delays
- Assuming your will controls: Beneficiary designations override your will
How to Update Your Beneficiaries
- Contact your insurer: Call or log into your account to request a beneficiary change form
- Complete the form: Provide full legal names, dates of birth, Social Security numbers, and relationship to you
- Specify percentages: If multiple beneficiaries, indicate how the benefit should be split
- Sign and submit: Return the completed form to your insurance company
- Keep confirmation: Store proof that the change was processed
Some insurance companies now allow online beneficiary changes through their customer portal. Changes typically take effect when the insurance company processes the request.
- Marriage or divorce
- Birth or adoption of a child
- Death of a current beneficiary
- Major change in relationships
- Annually, as part of financial review
Need Help with Your Beneficiary Designations?
Our licensed agents can help you understand your options and ensure your life insurance benefits go exactly where you intend.
Get Free GuidanceFrequently Asked Questions
Can I name multiple primary beneficiaries?
Yes. You can name as many primary beneficiaries as you like and specify what percentage each receives (totaling 100%). For example, you might name your three children as primary beneficiaries, each receiving 33.33% of the death benefit.
What if my beneficiary dies before me?
If your primary beneficiary dies before you, the death benefit goes to your contingent beneficiary. If you have no contingent beneficiary named, the benefit typically goes to your estate—which triggers probate. This is why naming contingent beneficiaries is so important.
Does my will override my beneficiary designation?
No. Your beneficiary designation on the life insurance policy takes precedence over anything in your will. The insurance company pays the death benefit directly to whoever is named on the policy, regardless of what your will says. This is why keeping beneficiaries updated is critical.
Can a beneficiary be changed after the policyholder dies?
No. Once the policyholder passes away, the beneficiary designation is final. The death benefit will be paid to whoever was designated as beneficiary at the time of death. This is another reason to review and update beneficiaries regularly while you're living.