4.6 Naming Individuals as Beneficiaries
We've looked at entities other than persons as beneficiaries, which are certainly not as commonly used. Now we'll look at the most common designation - that of a loved family member. The primary beneficiary is the policyowner's first choice (most typically a spouse). If the primary beneficiary predeceases the insured, the proceeds are then paid to the contingent beneficiary (aka successor beneficiary or secondary beneficiary - most typically the children); and if both the primary and the contingent beneficiaries are predeceased, then the proceeds would be payable to the tertiary beneficiary (third choice); and so on. There is no limit to the number of beneficiaries.
If there is more than one beneficiary named and the owner wants to see that they all get a share, he can stipulate in the contract just who gets how much. For instance, the policy may state something like the following:
"75% of the policy proceeds are to go to my wife and 25% are to go to my sister. In the event of the death of one, the surviving beneficiary shall receive the other's share of the proceeds."
Per Capita & Per Stirpes - Take a moment to fully understand the following charts. You will need to be familiar with both.
