Primary Beneficiary

What is a primary beneficiary?

When a person opens a retirement account, investment account, life insurance policy, or other financial account, the account holder typically names one or more beneficiaries. These beneficiaries receive the funds in the account if the account holder dies. If they choose to name a single beneficiary, that person will receive the full amount of money in the account. However, if they choose to name multiple beneficiaries, they’ll need to designate one or more people as the primary beneficiary.

Primary beneficiaries receive the first payout from a financial account when the account holder dies. For many people, primary beneficiaries are a family member or close friend, but may also be a preferred charity or other organization.

If an account holder wants to distribute the funds to multiple people, they can name multiple primary beneficiaries. If they name one primary beneficiary and name several others as contingent beneficiaries, the contingent beneficiaries will receive payouts only if the primary beneficiary dies before them.

Primary beneficiary FAQs

Who should I put as my primary beneficiary?

People can name anyone they want as a primary beneficiary. This includes but is not limited to:

• A spouse
• Adult children
• A long-term partner
• A close family friend
• An extended family member
• A parent
• Grandparents
• A nonprofit organization or charity

What’s the difference between primary and contingent beneficiaries?

A contingent beneficiary is a named individual who receives payouts from a financial account if the primary beneficiary dies before they do. Primary beneficiaries always receive payments first.

What happens if you have two primary beneficiaries and one dies?

A person can name two primary beneficiaries on a single account in some cases. However, they’ll need to decide how much each person receives when the account holder dies. For example, one person could receive 65% of an account’s value while the remaining 35% goes to the other primary beneficiary. 

However, if a primary beneficiary dies before the distribution of funds, the other primary beneficiary will receive their allocated payment amount as well as the amount due to the deceased primary beneficiary.

Who should you name as a beneficiary if you’re not married?

People can name any trusted person or preferred charity as a beneficiary based on their personal preferences. However, many unmarried people choose to name a sibling, parent, cousin, or close friend as a beneficiary. Be sure to review your primary or contingent beneficiary designations regularly and adjust your estate plan if necessary.