Contingent Beneficiary

Contingent Beneficiary Meaning

Contingent Beneficiary for any financial account is the person who has been designated as a secondary beneficiary, and the benefits or the associated proceeds are to be realized to them only in the event the primary beneficiary for the said financial account is not in a position to realize the same, which may happen due to events such as the death of the primary beneficiary.


  • The claim of the contingent beneficiary over the benefits of the financial account is conditional.
  • Benefits can be claimed only in the absence of a claim by the primary beneficiary.
  • The rights may further be limited as per the contract.
  • There may be multiple beneficiaries in a contract, and their proportionate share will be mentioned in the agreement.
Contingent Beneficiary

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How does it Work?

  • In case of any contract for financial accounts such as an insurance contract or a will, there might exist certain conditions that will define the terms relating to the benefits of the beneficiary.
  • The beneficiary will be required to adhere to such conditions in order to get the benefits under the contract.
  • However, in any case, their rights are secondary and conditional upon the inability of the primary beneficiary to present his claim for the reasons.
  • If the primary beneficiary accepts the benefits, then the contingent beneficiary no longer remains eligible for any benefits under the contract.


Let us understand the concept by way of an example with respect to the life insurance contract.

Mr. Arson mentions in his life insurance policy that upon his death, his spouse shall be the one who shall get the insurance proceeds in the event of his death. It is also mentioned that in case the spouse is deceased or of unsound mind as on the date of his death, the proceeds shall flow to the children of the couple.

In this example, the children of Mr. Arson can be termed as contingent beneficiaries as their benefits are secondary to that of the primary beneficiary, being the wife of Mr. Arson.

Who could be a Contingent Beneficiary?

Any individual, organization, charitable, or another trust may be chosen as the contingent beneficiary by the holder of the financial account. However, the person who is selected must be of legal age and capacity. Thus, if a minor is selected, it must be ensured that a legal guardian is appointed to manage the assets until the minor attains maturity age.

Will Contingent Beneficiaries Have Rights?

The rights of the contingent beneficiary are secondary to that of the primary beneficiary. Thus, they can establish its right over the benefits under a contract only in case of the following events:

  • The primary beneficiary dies or goes missing.
  • The primary beneficiary declines to accept the rights under the contract when it becomes due.

However, the rights may be subjected to certain other conditions, the fulfillment of which is required in order to claim to the rights.

Contingent vs. Primary Beneficiary

The difference between the two is that the primary beneficiary is the first person who is entitled to the benefits and the proceeds under the contract. On the other hand, the contingent beneficiary is the secondary beneficiary, and he can claim his rights only when the primary beneficiary is unable to present his claim, or such other conditions are met, as may be prescribed.


  • It is always beneficial for account holders to add primary and secondary beneficiaries for their accounts.
  • This is so because the assets will flow to the legal heirs who are named as beneficiaries without any unnecessary delay.
  • Adding only the primary beneficiaries is not sufficient. As a backup strategy, contingent beneficiaries should be added so that resources can flow to them in the event of the death of the account holder.

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