Beneficiaries are typically categorized as primary and contingent. A primary beneficiary is entitled to the proceeds of the policy upon the death of the insured, but such rights expire if he or she dies before the insured. A contingent (or secondary) beneficiary is entitled to the policy proceeds if the primary beneficiary has predeceased the insured. A common scenario involves an annuity in which the beneficary dies before the final sum is paid, and the rest paid to a contingent beneficiary. It is smart to have several levels of contingent beneficiaries.
A beneficiary can either be specific - a person identified by name and relationship - or a class designation - the naming of a group of individuals such as the children of the insured. While the naming of specific beneficiaries is usually definite, unintended complications may arise when designating classes of beneficiaries.
If you consider naming your children as beneficiaries, think about whether you want to include adopted or stepchildren.
When the insured planned for the proceeds of her life insurance policy to be paid to her three children or her grandchildren and two children predeceased the insured, with one deceased child leaving four children and the other child leaving no children, the distribution of the proceeds may appear tricky. The distribution in such cases will be governed by state intestacy laws and may vary from state to state.
Per capitala and per stirpes are words you may have seen. Per stirpes means according to the family tree, and per capita means per heads. In the hypothetical above, under a per stirpes distribution, the surviving child would get one-half of the proceeds and the deceased child's surviving children (the other branch) would divide the remaining half among themselves. Under a per capita distribution, the surviving child and the deceased child's four children would each receive one-fifth of the proceeds. There might be complications if any of the deceased child's children are still minors when the surviving child dies and legal guardians have not been appointed. If your claim has been delayed or denied, you should speak us today.