Beneficiaries: what you should know

A beneficiary is the person or entity that receives a policy benefit. It is the most consequential line on a policy and one of the most frequently forgotten.

Policies usually distinguish between primary and contingent beneficiaries. The primary receives the benefit; the contingent receives it only if no primary is living. Naming a contingent is a small step that prevents a benefit from ending up in probate.

You can typically name more than one person and assign percentages, which need to total one hundred percent. Naming a minor child directly is generally discouraged, since minors cannot receive funds directly — a trust or a designated guardian arrangement is the usual alternative.

One detail surprises people consistently: a beneficiary designation generally overrides a will. If a policy still names an ex-spouse, that designation typically controls regardless of what the will says. Updating the policy is the only reliable fix.

The events that most often make a designation stale are the same ones that prompt coverage in the first place — marriage, divorce, a birth, a death, or estrangement. Reviewing designations after any of them, and every few years regardless, keeps the policy aligned with your intent.

Tell your beneficiaries the policy exists and where the documents are kept. Benefits are not paid automatically; someone has to file a claim, and they cannot do that for a policy they do not know about.