by Guest » Tue Mar 31, 2009 11:56 am
I’m interested to know how the position of the contingent beneficiary is described in a policy. What are the rights of contingent beneficiaries? If the contingent beneficiary is a minor, how the proceedings of the death benefits would get affected?
Posted: Tue Mar 31, 2009 12:41 pm Post Subject:
The contingent beneficiary has no right, unless the primary beneficiary is dead before or at the same time as the policy holder.
Posted: Wed Apr 01, 2009 10:59 am Post Subject: insurance
( just putting my '2 cents in) On my Life Insurance policy I have a good friend of mine ( POA on other paperwork I have ) who is 'Primary' Beneficiary. My son and my parents are contingent beneficiaries. My 'Primary' lives pretty close to me. However..my parents live in another state.....so, I thought doing my Life Insurance this way was more practical.
Posted: Wed Apr 01, 2009 11:39 am Post Subject:
Hope you have reviewed your decision properly before naming your primary and contingent beneficiaries. As lori has mentioned the contingents beneficiaries have no right on the policy benefits until the primary beneficiary pre-deceased the policy holder or unidentifiable by the insurer.
The primary beneficiary would receive all the benefits of the policy and may decide not to share it with the other named beneficiaries of the plan.
~Jeremy
Posted: Wed Apr 01, 2009 12:25 pm Post Subject:
Hi Texas-ranger
A contingent or secondary beneficiary has no right to receive any proceeds from a policy unless the primary beneficiary is also deceased at the same time as the policyholder. A contingent beneficiary may receive portion of the benefits received by the primary beneficiary only if the primary beneficiary wants to share the proceeds or in case the proceeds are declined by the primary beneficiary. So it seems that a contingent beneficiary has little or no right in a policy.
Posted: Wed Apr 01, 2009 01:10 pm Post Subject:
Hi Lori,
It really sounds interesting :)
The contingent beneficary has no right, unless the primary beneficary is dead before or at the same time as the policy holder.
What would happen if the primary beneficiary dies soon after the policy holder passes away. Can't the contingent beneficiary claim for the benefits now?
A contingent beneficiary may receive portion of the benefits received by the primary beneficiary only if the primary beneficiary wants to share the proceeds or in case the proceeds are declined by the primary beneficiary.
Would the primary beneficiary be able to share the proceeds to any proportion he chooses?
Crossbreed
Posted: Wed Apr 01, 2009 08:41 pm Post Subject:
Would the primary beneficiary be able to share the proceeds to any proportion he chooses?
yes, as it would be purely a 'gift'..What would happen if the primary beneficiary dies soon after the policy holder passes away. Can't the contingent beneficiary claim for the benefits now?
Doubt it I think the money would go to the estate of the primary beneficary..however it would make for interesting 'lawyering'.. :wink:Posted: Thu Apr 02, 2009 07:18 am Post Subject:
Would the primary beneficiary be able to share the proceeds to any proportion he chooses?
yes, as it would be purely a 'gift'..
Would this gift be tax free then?
And, I'd also like to know, if its worth keeping contingent beneficiary in the policy since he has no right on the policy proceedings. What if I want the benefits to go to both the parties named in my policy?
Posted: Thu Apr 02, 2009 02:53 pm Post Subject:
For the most part, life insurance proceeds are tax free. That is, if it's paid by the insurance company to the beneficiary. If the beneficiary decides to gift those proceeds to someone else then that has nothing to do with insurance proceeds.
If you want the proceeds to go to both parties then make them both a primary beneficiary with a split with whatever percentages you want, like a 50%/50% split or you can even do a 70%/30% split if you want. If one of them dies before the insured, then it would revert to 100% on the survivor. Hope this helps.
Posted: Thu Apr 02, 2009 08:12 pm Post Subject: insurance
I'm now starting a 401(K) through my employment. I have a name for the 'Primary' and my 'Secondary/Contingent' is my son. However.....right now my son is under 18. Would it be a good idea to add someone else, PLUS my son, to the 'Secondary', since he is a Minor right now?
Posted: Fri Apr 03, 2009 05:28 am Post Subject:
How long its SD before he would turn 18? You may appoint someone you trust as the guardian of the boy or may check out if the authority would take up the fiduciary responsibility. You may also decide to set-up a revocable living trust in order to avoid the process naming guardian.
The 401(K) would be available to the beneficiary either in monthly installments or in lumpsum. But this proceeding would be taxable.
Thanks,
Rupert
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