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What Happens When Your Life Insurance Beneficiary Dies Before You?

Last modified: Jul 25, 2023

At first, life insurance policies seem quite simple: if you pass away while the policy is active, the person you have named your beneficiary will receive the death benefit.

However, what happens if one primary beneficiary dies before you do or dies before receiving a payout from your policy? These scenarios might complicate things.

Keep scrolling through this review to have all of your questions answered. 

Primary and Secondary Beneficiaries Explained

What Are Primary and Secondary Beneficiaries? 

The primary beneficiary stands first in line to receive a death benefit if an insured individual dies. The contingent or secondary beneficiary will be next in line. Some policyholders also designate final beneficiaries just in case the first and second beneficiaries pass away too. 

Is Your Spouse Automatically Your Life Insurance Beneficiary?

There is no requirement in the policy that only a spouse can be assigned as a beneficiary. The policyholder can choose any beneficiary they wish. However, in case you live in one of the community property states, your life insurance death benefit will automatically be handed over to your spouse, whether you named them as a beneficiary or not. This is because spouses are considered to be equal owners of joint assets. Some states that have community property laws include:

  • Wisconsin
  • Washington
  • Texas
  • New Mexico
  • Nevada
  • Louisiana
  • Idaho
  • California
  • Arizona

If you wish to keep this from happening, your spouse will have to give you written consent with the name of the intended beneficiary before you pass away. 

Do I Need Secondary Beneficiaries?

You don’t necessarily need secondary beneficiaries. However, it’s a good idea to name one in case the primary beneficiary passes away before you do. Assigning a contingent beneficiary to your life insurance policy can also help your family avoid unnecessary expenses and time that come with probate. For those who don’t know, probate is a legal process where a deceased persons’ will is reviewed to determine its authenticity and validity. If the legal will is absent, then the assets get distributed according to the laws of intestacy.

For instance, suppose you list your children’s stepfather as the primary beneficiary and your favorite charity as your secondary beneficiary for your life insurance proceeds. If the stepfather passes away, your children will not fight over your death benefit because you listed a contingent beneficiary — the charity.

What Are the Benefits of Assigning a Secondary Beneficiary in a Will?

The presence of contingent beneficiaries can prevent the will from going into probate. Moreover, it avoids confusion when the primary beneficiary passes away or cannot inherit the assets. 

In addition, a policyholder can create contingencies preventing inheritance from being distributed without meeting specific requirements first. For instance, a policy owner could list their daughter as the secondary beneficiary and mention a restriction that she could only inherit the death benefit after finishing college. 

Another great benefit of this life insurance feature is that there is an option of listing multiple beneficiaries as contingent beneficiaries. The policy owner can specify the percentage of the will each beneficiary will receive. Also, contingent beneficiaries receive your assets in the same manner as primary beneficiaries. This means if the primary beneficiary was set to receive $2000 over 10 years, the secondary beneficiary would also get the same death benefit.

Can I Have Two Primary Beneficiaries?

Yes, you can have more than one primary beneficiary. Also called co-beneficiaries, these multiple primary beneficiaries will share your death benefit equally or receive the sum based on a predetermined percentage.  

What Happen If There Are Two Beneficiaries on one Life Insurance Policy?

Suppose there are multiple primary beneficiaries, and one of them passes away. In that case, your death benefit will be split equally (or based on the percentage) among the remaining beneficiaries. In contrast, let’s say that your sister and spouse are both listed as primary beneficiaries in your policy. If they are co-beneficiaries, then each of them will receive 50% of your death benefits in the event of your death. 

Can You Have Multiple Beneficiaries?

Yes, you can have multiple beneficiaries. As mentioned earlier, these beneficiaries are the individuals you name as a backup just in case the primary beneficiary passes away before or during the time you do. These backup individuals will receive your death benefit if your primary beneficiaries become unable to. 

What Is Multiple Beneficiary?

The multiple beneficiary clause is a provision in your life insurance policy or another investment vehicle (such as individual retirement accounts or annuity accounts, e.g., IRA). It permits policyholders to list down individuals, trusts, and organizations as their primary or secondary beneficiaries. 

What Happens When a Sole Beneficiary Dies?

Generally, if a sole beneficiary passes away, their death benefit automatically lapses (fails), and they or their immediate family will not inherit anything from your estate. Whatever amount of your assets they owed will be passed onto your residual estate to be redistributed properly.

Who Can Change the Beneficiary on a Life Insurance Policy?

Only the owner of the life insurance policy is allowed to change the name and designation of beneficiaries. They can do so at a time of their choosing and without consulting with the previously named beneficiaries.

What Is the Process to Change Life Insurance Beneficiaries?

In most cases, it is pretty simple: you need to contact your insurance provider and request a change of beneficiary form. Once you fill out this form accurately, you should also note down beneficiaries’ social security numbers so that the insurance provider can quickly pay death benefits after you pass away. 

Note that if you are going to name more than one beneficiary, don’t forget to mention the percentage of death benefit they should receive. 

Can a Beneficiary Be Removed From a Life Insurance Policy?

There are two kinds of beneficiary designations: revocable and irrevocable. A revocable beneficiary can easily be changed or removed anytime. On the other hand, irrevocable beneficiaries can’t be removed from policies without their approval first.

Can a Beneficiary Be Changed After Death?

No, beneficiaries and their designated statuses cannot be changed after the death of the policyholder. However, beneficiaries will always have the option to disclaim their interest in the policy and pass the death benefit onto the named contingent beneficiaries. 

Can a Power of Attorney Change a Beneficiary on a Life Insurance Policy?

Generally, a power of attorney can change beneficiaries on a life insurance policy. 

However, power of attorney can’t do anything when the policy includes irrevocable beneficiaries. These beneficiaries may have been assigned intentionally by the policyholder or ordered by the court, such as in the case of divorce settlements. 

What Happens if You Die First, but then Your Beneficiary Dies Before the Death Benefit Is Paid?

In this case, your life insurance benefit will go to the estate of your beneficiary instead of your estate. It will be handled according to your beneficiary’s will or dealt with by the state.

What Happens if One Primary Beneficiary Dies?

If the primary beneficiary dies, their potential share of the benefits will be paid to the named contingent beneficiaries. If there are no secondary beneficiaries, the death benefit would be passed to the policyholder’s estate. 

What Happens if One of the Multiple Beneficiaries Dies?

If you have listed multiple primary beneficiaries in your life insurance policy and one of them dies, then the proceeds of their share are split among the remaining beneficiaries. If they are co-beneficiaries, each of them will get 50% of the proceeds after you pass away. However, if either of these beneficiaries were to pass away before you, the final beneficiary will receive the death benefit in full. 

What Happens if Your Beneficiary Is an Organization and it doesn’t exist anymore?

In this scenario, the insurance provider or the court will consider the case of the organization the same as a beneficiary’s death. Therefore, the proceeds of their share will be split among other beneficiaries or will be paid to the deceased’s estate. 

What Happens if Both Your Beneficiary and You Die at the Same Time?

Let’s assume that your spouse is your beneficiary and that both of you were to pass away at the same time (for instance, if both of you got in a fatal accident). If that’s the case, your death benefit will be passed on to either your estate or your contingent beneficiaries. However, if there is any proof that your spouse outlived you (like if a witness saw them move after an accident), the insurance benefits will be paid to your spouse’s estate.

What Happens if You Die Without Naming Your Beneficiary?

If you were to pass away without ever naming any beneficiaries in your will, the death benefit would be paid to your estate. 

What Happens if You Die With No Beneficiary?

If you have no contingent beneficiaries, then your death benefit will get added to your estate and, therefore, passed to your heirs based on your will. If it becomes a part of your estate, the amount in your death benefit will get taxed and could be used to pay off debts. If policy providers cannot find an heir, then the state gets to claim ownership of these assets. 

What Happens to a Bank Account When a Person Dies Without a Beneficiary?

Suppose a person dies without leaving behind a will. In that case, their bank account money is passed on to the named beneficiaries or POD for the account. If there are no named beneficiaries or POD, the state executor claims responsibility for handling the assets owned by the deceased, which also includes the money in their bank accounts.

How to Protect Beneficiaries

1.Name a Contingent Beneficiary

It is crucial to name both primary and contingent beneficiaries for your life insurance policy. Moreover, you could assign multiple beneficiaries just in case some of them were to pass away before you.

2. Designate Proper Proportions

By designating proper proportions of the death benefit to beneficiaries, you ensure that there is no confusion after you pass away. Furthermore, it helps if one of the beneficiaries dies around the same time as you. 

3. Update Policy

It is essential to keep updating your policy as time passes by. You could add beneficiaries or redistribute benefit proportions based on your relationship status. For instance, it’s a good idea to revisit the policy in case of a divorce or your spouse’s death.

4.Keep Beneficiaries in the Know

Keeping beneficiaries in the loop makes the process even more seamless since they know exactly what to expect from your death benefit. Therefore, there will be no confusion in the event of your death, and your death benefit will be distributed just as you prefer. 

Per Stirpes Versus per Capita Distribution

With respect to a beneficiary designation, the per capita distribution method commonly means that your death benefit will be distributed equally among your beneficiaries. In contrast, the per stirpes method of distribution is based on a generational approach. If a beneficiary precedes you in death, then the benefits would pass on to that person’s children in equal parts. Generally, spouses are not part of a per stirpes distribution. 

In the per stirpes method of distribution, if your child were to pass away before you, your other children would receive half of the benefits, and the children of the deceased would be entitled to the other half. 

In Conclusion

In this article, we've provided detailed explanations to different scenarios related to the life insurance named beneficiaries. So, now you know what happens if one primary beneficiary dies or who has the right to change a life insurance policy's beneficiary.

Don’t forget that it is crucial to name both primary and contingent beneficiaries for your life insurance policy to avoid unnecessary stress in the future. Moreover, naming secondary beneficiaries may prevent your family from dealing with probate. 

Finally, keep your policy regularly updated by noting any changes to beneficiaries, designations, or other details.


How Can I Be Sure That My Life Insurance Policy Is Divided up Between My Beneficiaries on a per Stirpes Basis?

While filling out the beneficiary designation form, indicate the preferred per stirpes approach on your life insurance policy. Note that the beneficiaries in a per stirpes contract should be one individual and not a group of people. Moreover, you should use the word “descendants.” Your life insurance agent will be happy to assist you with the matter in case you have any doubts.

If I Have Some Unpaid Debts at the Moment of Death, Can Creditors Claim My Death Benefit?

No, creditors cannot claim your death benefit. However, if your death benefit is being paid out through your estate, then it will also be paid out to your creditors through the process we refer to as probate. The best way of ensuring that creditors don’t claim your death benefit is to list your beneficiaries and keep updating your policy as time passes by. 

What if there’s a Need to Change My Beneficiary?

To make changes to your beneficiaries, you need to contact your insurance providers and request a change beneficiary form. Once you receive the form, make sure you fill it out completely and accurately. Be sure that you write the beneficiaries’ names correctly. Also, include their social security numbers. By listing all of these details, your insurance provider will be able to make the respective payments easily after you pass away. Finally, don’t forget that making changes to beneficiaries is an essential part of keeping your life insurance policy up to date. 

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