What does a "contingent beneficiary" mean in the context of life insurance?

A "contingent beneficiary" in the context of life insurance refers to a secondary recipient who is designated to receive the death benefit if the primary beneficiary is unable to do so. This means that if the primary beneficiary passes away before the insured or is otherwise unable to benefit from the policy, the contingent beneficiary is the next in line to receive the payout.

This designation is important for ensuring that the policyholder’s intentions are carried out, as it provides a clear plan for distributing the policy benefits in the event that the primary beneficiary cannot receive them. It establishes a hierarchy of beneficiaries, ensuring that the death benefit does not go unclaimed.