Definition
The term contingent beneficiary refers to an entity that will be the beneficiary of a will, insurance policy, or trust, if the primary beneficiary is unable to receive the assets. As the name implies, a contingent beneficiary is not the same entity as the primary beneficiary.
Explanation
The contingent beneficiary is the "second in line" to receive a benefit from an insurance policy, will, or trust, if the primary beneficiary is unable to receive the donor's assets. Contingent beneficiaries are oftentimes identified in agreements such as wills and life insurance policies in the event the donor outlives their primary beneficiary or they are otherwise unable to receive the donor's assets. Contingent beneficiaries can also be entities that are only eligible to receive the donor's assets under certain prescribed conditions.
As is the case with a primary beneficiary, a contingent beneficiary is oftentimes a person, but can also be a charitable organization. There is normally only one contingent beneficiary, but if several entities are named in the contract, then the assets must be divided equally among these parties.
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