Quick answer
The life insurance beneficiary designation on the policy controls who gets the death benefit - it overrides the will. A primary beneficiary receives the death benefit first; a contingent (secondary) beneficiary receives the proceeds only if all primary beneficiaries predecease the insured. Per stirpes sends a deceased beneficiarys share to that beneficiarys children; per capita redistributes the deceased beneficiarys share among the surviving named beneficiaries. A minor (under 18) cannot directly receive a life insurance payout - name a custodial UTMA account, a revocable trust, or a special-needs trust instead. Review and update your beneficiaries after every major life event: marriage, divorce, the birth or adoption of a child, or the death of a named beneficiary.
You purchased a life insurance policy to take care of the ones you love after you die. But what if that day were tomorrow? How can you be sure the benefits of your policy will wind up in the right hands? Naming a beneficiary is the first step in making sure your proceeds go exactly where you intended. Here are some important things to consider to be sure your beneficiary gets paid.
Name Someone as Your Beneficiary
First and foremost, you should name a beneficiary on your life insurance policy. You can have a primary beneficiary and a contingent, or secondary, beneficiary.
The primary beneficiary is the person or persons you name to receive the life insurance proceeds when you die. The contingent beneficiary, as you may have guessed, is the person or persons you name to receive the life insurance proceeds in the event the primary beneficiary passes away before, or at the same time, you do.
When you name your life insurance beneficiary, remember to:
- Be very specific as to whom your beneficiary or beneficiaries are and determine an amount, preferably a percentage, that each will receive from the policy.
- On a regular basis, review and maybe even revise your beneficiary choices, especially when circumstances change, like marriage, the birth of a child, divorce, a career change, an economic change, or the death of a beneficiary.
- Always speak with an attorney and/or a tax specialist to discuss what the consequences of your decisions will be.
Other Options in Naming Your Beneficiary
Typically, you will want to name a relative or close friend as the beneficiary on your life insurance policy, but there are other options.
You can name your estate as the beneficiary to help pay the taxes and other settlement costs of your estate, with any remaining money being distributed according to the terms of your will. If you don’t have a will, your state laws will dictate the distribution of your life insurance proceeds.
There is a disadvantage in naming an estate as your beneficiary, however. The life insurance proceeds may increase the amount of estate taxes that are payable. They may also be subject to probate attorney’s fees and creditor claims.
To avoid these costs, you can name a relative as the beneficiary and request that the proceeds first go to settling your estate.
You could also name a charitable organization that is not your employer as a beneficiary. You will need to indicate the name of the charitable organization along with a contact name, their tax identification number, and just as you would with a person, the percentage of the benefit that would be payable to them.
Another type of beneficiary could be an irrevocable life insurance trust. This option gives you more control over your insurance policy and the money that is paid from it. It also lets you reduce or even eliminate estate taxes, so more of your estate can go to your loved ones.
Contact Insurancy at 1-855-458-1985 to discuss your options for naming a beneficiary on your life insurance policy.
Community Property State Consent
You should also be aware of something called a Community Property State Consent. This is for residents of Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
If you are married and living in one of these community property states, and you name someone other than your spouse as your beneficiary, you may be required to have your spouse sign to waive his or her rights to any community property interest in the benefit.
What Happens If You Don’t Name a Beneficiary?
If you don’t name a beneficiary on your life insurance policy, the proceeds are usually paid to the aforementioned estate automatically, unless you indicate otherwise in the policy. Obviously, the best solution is to simply name a beneficiary.
Your Beneficiary: How They Claim Life Insurance Benefits
Insurance companies usually require that beneficiaries file claims, along with a certified copy of the death certificate, to receive the benefits from a life insurance policy. The insurance agency may have you fill out a claim form or additional forms reporting the death. In some cases, an insurance company adjuster may contact you with a few routine questions. This is merely a safeguard against insurance fraud and should not be considered out of the ordinary.
Many insurance companies will issue a payment between one and two months from the date of the claim.
Of course, sometimes the proceeds go unclaimed because policy documents were either lost or because beneficiaries didn’t even know a life insurance policy existed.
Often it’s best to leave stuff like this to industry experts.
State insurance regulators have been looking into the practices of large insurers and have urged them to proactively identify those policies that may be due for a payout.
The best way to avoid any potential problems with a life insurance payout is for you to discuss the policy with your beneficiaries. Oftentimes, an insurance agent will get a call from someone who thinks a deceased relative had a life insurance policy, but they are not certain and they don’t know how to find the policy.
In a New York Times article, Rosanne Placey, a spokeswoman for the Pennsylvania insurance commissioner, said:
“We always tell consumers to inform their beneficiaries of the policies. A policyholder should keep copies of a policy at an off-site location, such as in a safe deposit box, or with a lawyer or financial adviser, and make sure the beneficiaries know where the documents are kept and how to get access to them.”
Frequently Asked Questions
What are the rules for naming a life insurance beneficiary?
You can name almost anyone as a life insurance beneficiary: a spouse, child, parent, sibling, friend, business partner, a trust, an estate, or a charity. The two restrictions are: (1) insurable interest at the time of policy issue - the beneficiary must have a logical reason to financially benefit from the insureds continued life (presumed for immediate family, business partners, and lenders), and (2) in 9 community property states (AZ, CA, ID, LA, NV, NM, TX, WA, WI), naming a non-spouse beneficiary may require written spousal consent if the policy was funded with community-property income during marriage.
What is the difference between a primary and contingent beneficiary?
The primary beneficiary receives the death benefit first. The contingent beneficiary (also called the secondary beneficiary) receives the death benefit only if all primary beneficiaries predecease the insured or disclaim the proceeds. Most policies allow you to name multiple primary beneficiaries and multiple contingent beneficiaries with specified percentage shares for each. Example: "Spouse Jane Doe, 100 percent primary; Daughter Alice Doe, 50 percent contingent; Son Bob Doe, 50 percent contingent" means Jane gets the full $500,000 if alive at the insureds death, otherwise Alice and Bob split it 50/50.
What does per stirpes mean on a life insurance beneficiary form?
Per stirpes (Latin for "by the branch") means that if a named beneficiary predeceases the insured, that beneficiarys share passes to that beneficiarys descendants. Example: $500,000 split equally between "Daughter Alice (per stirpes)" and "Son Bob (per stirpes)" with Alice having two children. If Alice dies before the insured, her $250,000 share is split equally between her two children ($125,000 each). Per stirpes is most commonly used when the insured wants to preserve generational continuity of the death benefit - especially when there are children and grandchildren.
What does per capita mean on a life insurance beneficiary form?
Per capita (Latin for "by the head") means that if a named beneficiary predeceases the insured, that beneficiarys share is redistributed equally among the surviving named beneficiaries. Example: $500,000 split equally between "Daughter Alice (per capita)" and "Son Bob (per capita)" with Alice having two children. If Alice dies before the insured, the full $500,000 goes to Bob - Alices children receive nothing because per capita does not pass through to descendants. Per capita is most commonly used when the insured wants the death benefit to go only to named beneficiaries who survive.
Can I name a minor child as a life insurance beneficiary?
Yes you can, but you almost always should NOT. A minor (under 18 in most states; under 21 in some) cannot directly receive a life insurance payout, so the carrier will not write a check to a minor named beneficiary. Instead the carrier will either (a) hold the funds until the child reaches the age of majority, or (b) require a court-appointed conservatorship to receive the funds on the childs behalf - which is expensive, slow, and the conservator is subject to court oversight until the child turns 18 or 21. The right structure is to name a custodial UTMA/UGMA account, a revocable trust, or a special-needs trust as the beneficiary instead.
Can I name a trust as a life insurance beneficiary?
Yes. Naming a trust as life insurance beneficiary is one of the most common estate-planning patterns and has three main use cases: (1) a Revocable Living Trust receives the death benefit and distributes per the trust terms (useful for minor children, special-needs beneficiaries, or complex multi-beneficiary distributions), (2) an Irrevocable Life Insurance Trust (ILIT) owns the policy from inception and receives the death benefit free of federal estate tax (used by high-net-worth buyers above the federal exclusion), and (3) a Special-Needs Trust receives the death benefit and disburses funds without disqualifying the beneficiary from Medicaid or SSI benefits.
How do I change the beneficiary on my life insurance policy?
Submit a written Beneficiary Change Request form (also called Change of Beneficiary Form) to your insurance carrier. The form is available from your carriers website or your independent agent. It requires the policy number, the insureds name, the new primary and contingent beneficiary names, the relationship to the insured, each beneficiarys percentage share, the per-stirpes-or-per-capita election, and the policyholders signature (notarization is sometimes required). The change becomes effective when the carrier receives and records it, not when it is signed. Always confirm in writing that the carrier has recorded the change.
Does life insurance go to the beneficiary or the estate?
If a named beneficiary is alive at the insureds death, the death benefit goes directly to that beneficiary - it bypasses probate and is paid within 7 to 14 business days of the carrier receiving the death certificate and claim form. If NO named beneficiary survives the insured (or no beneficiary was ever named), the death benefit is paid to the insureds estate by default. This is generally the worst outcome: the death benefit becomes part of the probate estate, is subject to creditor claims, and may trigger federal or state estate tax inclusion. Always name a primary AND contingent beneficiary to avoid this outcome.
Do I need spousal consent to name a non-spouse beneficiary?
In 9 community property states (AZ, CA, ID, LA, NV, NM, TX, WA, WI), the answer is sometimes yes. Community property states treat income earned during marriage as jointly owned, so if the life insurance premium was paid with community property funds, a non-spouse beneficiary designation may require written spousal consent. In the 41 common law states, the policyholder can name any beneficiary without spousal consent regardless of who paid the premium. The most common community-property issue is when a spouse names a parent, sibling, child from a prior marriage, or charity as beneficiary instead of the current spouse.
What happens to my life insurance if I get divorced?
In most states, a divorce does NOT automatically remove an ex-spouse as your life insurance beneficiary - the designation continues until you actively change it. Some states (around 26 states as of 2026) have "revocation upon divorce" statutes that automatically revoke an ex-spouse beneficiary designation on a divorce decree, but this is NOT universal and can be overridden by ERISA (which preempts state law for employer-provided group life insurance). The safest practice is to update beneficiary designations on every life insurance policy you own immediately after a divorce decree is finalized - including ALL employer group life policies, individual term and permanent policies, and retirement account beneficiaries.
