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Can I name more than one beneficiary on my life insurance policy?

Do you prefer to learn by watching? We answer this question in a video below. Click here to jump ahead.

One of the most important steps in setting up your life insurance policy is naming your beneficiary. This beneficiary is the individual who will receive the policy’s benefits (money payout) upon your death.

While you must name at least one beneficiary for your policy, it’s possible to go above and beyond, naming multiple people on your life insurance policy. This ensures that your death benefit goes to a meaningful individual (or organization) even if your primary beneficiary precedes you in death.

Our Quotacy agents can help you understand how to designate your life insurance policy’s beneficiaries.

Contact us if you have any questions after reading our article today.

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What are the different beneficiary levels?

There are many ways to distribute life insurance payouts under a life insurance policy. The most straight forward option is to have 100% of the death benefit go to one primary beneficiary. However, along with primary beneficiaries, you also have additional levels: secondary and tertiary.

Naming a secondary beneficiary (contingent beneficiary) means that he or she would be next in line for the payout if your primary beneficiary would be unable to receive it.

John Smith has a $500,000 life insurance policy and names his wife primary beneficiary.

He also names his brother as secondary beneficiary in case he and his wife die at the same time.

Naming a tertiary beneficiary would be the back-up if both the primary and secondary beneficiaries were unable to receive the death benefit.

John Smith has a $500,000 life insurance policy and names his wife primary beneficiary.

He also names his brother as secondary beneficiary in case he and his wife die at the same time. John lists his local animal shelter as a tertiary beneficiary should both his wife and brother be unable to receive the death benefit.

While you’re only required to name a primary beneficiary, it’s always a good idea to name at least a secondary beneficiary just in case your primary dies before you do.

Questions? Talk with our experienced advisors.

 

If you only name a primary and this person dies before you do, then your death benefit proceeds revert back into your estate and may go through probate.

This article explains some beneficiary scenarios to consider when you wish to provide for your loved ones using life insurance.

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What are the different ways of distributing the proceeds?

You can leave 100% of the life insurance death benefit to one person. If you have a large family, you can even choose to divide it into 10 equal shares of 10%.

It’s up to you to decide what is most beneficial for your loved ones, a business, or charity.

When it comes to naming beneficiaries you may assign proceeds to be distributed per stirpes or per capita. These distribution options help the claims process if any beneficiary were to die before the policyowner.

Per stirpes means that proceeds are divided by rank in the family and per capita means that proceeds are divided by the number of people.

Infographic: Per Stirpes vs. Per Capita Assignment for Quotacy blog: Naming Multiple Life Insurance Policy Beneficiaries.

Of the two options, per stirpes is more common.

If you have a fairly large estate, be sure to work with an estate planner to ensure that you avoid any unnecessary estate taxes.

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Review your term life insurance policy annually as life events occur such as a marriage (or divorce), the birth of a child, buying a home or a second home, or establishing a business. Taking the time for a policy review is the best way to ensure what happens upon your death is exactly what you wish.

We’re here to help you protect your family with the best term life insurance policy for your unique financial situation. Please reach out if we can be of service to you or your family.

Watch the Multiple Life Insurance Beneficiaries Video

Video Transcript

Welcome to Quotacy’s Q&A Friday where we answer your life insurance questions. Quotacy is an online life insurance agency where you can get life insurance on your terms.

I’m Jeanna and I’m Natasha.

Today’s question is:

Can I name more than one beneficiary on my life insurance policy?

 
 
Yes, you can have multiple primary beneficiaries. And not only primary beneficiaries, but we also recommend you name contingent beneficiaries.

To quickly explain what these are, primary beneficiaries are the people you want your life insurance money going to. Contingent beneficiaries are the people you name as backups should your primary beneficiaries die before or at the same time as you. These backup beneficiaries only receive the money if the primary beneficiaries are unable to.

Primary Beneficiary

A person that you want your life insurance money to go to.

Contingent Beneficiary

A person that you name as a back-up beneficiary in case your primary beneficiaries are unable to receive the payout.

 
 
The main reason you buy life insurance is to financially protect your beneficiaries so ensuring you set them up properly is important. If you have multiple beneficiaries listed on your policy also list what percentage of the death benefit you’d like each person to receive. No matter how many beneficiaries you have the total percentage amount needs to add up to 100%.

For example, if you name your wife and mother as your two primary beneficiaries you can state that you want them to split the benefit 50/50 or you can even state that your wife gets 90% and your mother gets 10% or your wife gets 60 and your mother 40. You can designate whatever percentages you want as long as it adds up to 100.

If you have multiple beneficiaries and do not state specific percentages the life insurance company will assume the proceeds are to be paid out equally.

You can also name a trust or entities as beneficiaries. Entities can be businesses, churches, charities, etc. For example, you could state that you would like 75% of your policy’s death benefit going to your sister, 15% of the benefit going to your church, and the remaining 10% going to the local animal shelter you adopted your dog from.

illustration showing examples of beneficiary designations for Quotacy blog Naming Multiple Life Insurance Policy Beneficiaries

So, you’ve learned that if a primary beneficiary dies before or at the same time as you their benefit goes to a contingent beneficiary. But what happens if you have more than one primary beneficiary and only one of them dies? What happens to their share of the death benefit?

There are three things that can happen if a primary beneficiary dies. On your policy you can specify that your proceeds are distributed (1) per capita, (2) per stirpes, or (3) not specify either one.

Per Capita Distribution

Payout is distributed equally between the primary beneficiaries and any descendants of deceased primary beneficiaries.

Per Stirpes Distribution

Descendants of a deceased primary beneficiary only split the deceased’s share of the payout.

 
 
Per capita means that the proceeds are distributed equally between the surviving beneficiaries and the deceased beneficiaries’ descendants. Per stirpes means that the descendants of the deceased beneficiary splits only the deceased’s share.

Let’s look at a few examples to help explain how these distributions work.

You have a life insurance policy. You name your sister and two brothers as the primary beneficiaries. Your sister has two children and each brother has a child.

illustration showing life insurance policy beneficiaries for Quotacy blog Naming More T

First Example

You have a life insurance policy. You name your sister and two brothers as the primary beneficiaries per capita. You die and all your siblings are alive. Your sister and two brothers divide the death benefit into three equal shares.

But let’s say you die and your sister has also passed away. Per capita states that the death benefit now is split into four equal parts. 25% going to each brother and 25% going to each of the sister’s two children.

illustration showing life insurance policy beneficiaries per capita for Quotacy blog Naming Multiple Life Insurance Policy Beneficiaries

Second Example

You name your sister and two brothers as the primary beneficiaries per stirpes. If you die and and all your siblings are alive, your sister and two brothers divide the death benefit into three equal shares.

But let’s say you die and your sister has also passed away. Per stirpes states that the two brothers each still receive their third and your deceased sister’s third is split between her two children.

illustration showing life insurance policy beneficiaries per stirpes for Quotacy blog Naming Multiple Life Insurance Policy Beneficiaries

Third Example

You name your sister and two brothers as the primary beneficiaries and do not specify either per stirpes or per capita. If you die and all your siblings are alive, your sister and two brothers divide the death benefit into three equal shares.

But let’s say you die and your sister has also passed away. Now the two brothers simply split the proceeds into two equal halves.

illustration showing life insurance policy beneficiaries with unspecified distribution for Quotacy blog Naming Multiple Life Insurance Policy Beneficiaries

Final Example

You have a life insurance policy. You name your sister and two brothers as the primary beneficiaries and do not specify either per stirpes or per capita. You and your siblings are all going on vacation together and tragically die in a plane crash. The death benefit now goes to whomever you listed as a contingent beneficiary.

illustration showing life insurance policy contingent beneficiary for Quotacy blog Naming Multiple Life Insurance Policy Beneficiaries

No matter how you want to set up your policy’s beneficiaries, we can help. Apply for life insurance online through Quotacy and your agent will keep you updated every step of the way and can help you with any questions.

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If you have any questions about life insurance make sure to leave us a comment. Otherwise, tune in next week when we answer the question will the cost of my term life insurance policy be the same as my quote? Bye!

Photo credit to: William McMasters

About the writer

Headshot of Natasha Cornelius, a life insurance writer, for Quotacy, Inc.

Natasha Cornelius

Marketing Content Manager

Natasha is a writer and content editor at Quotacy. She is also co-host of Quotacy’s YouTube series. She can't get enough of life insurance and outside of work is also working toward her Chartered Life Underwriter designation. Connect with her on LinkedIn.