Contingent beneficiary – What is it, definition and concept | 2022

This contingent beneficiary must be so named in the insurance contract in the event that the final beneficiary dies before the insured and cannot receive compensation.

The contingent beneficiary, who may be a natural or legal person, will receive the corresponding economic benefits in accordance with the provisions of the policy. In addition, this figure does not receive any right until the insured loss is fulfilled, and must also be fulfilled with the death of the final beneficiary.

Insurance contracts must specify who will be the contingent beneficiary. It is the policyholder who must designate who will be this substitute beneficiary.

Parties to the insurance contract

To fully understand what position it occupies and what is the right of the contingent beneficiary, we must see the parts that constitute insurance contracts:

  • Insurance company: legal entity that in exchange for a periodic payment (premium) covers a risk that, if it occurs, undertakes to indemnify or provide benefits.
  • Insured: is the person who owns the insurance, that is, the person who is protected by the insurance.
  • Taker: it is the person who contracts the insurance, the one who signs the policy and negotiates the conditions and finally is the person who pays the premiums.
  • Final beneficiary: person who receives the financial compensation from the insurance company when the insured loss occurs.
  • Contingent beneficiary: It will be the natural or legal person who replaces the final beneficiary when he/she dies before the insured.


The main characteristics of the contingent beneficiary are:

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  • This beneficiary can be a natural or legal person.
  • The insurance company must have the information regarding the relationship between the insured and the contingent beneficiary.
  • It must be expressly stated in the insurance policy who this beneficiary will be. In the event that this contingent beneficiary is not designated, the insurance company may not designate any recipient of the corresponding compensation.
  • One or more contingent beneficiaries may be designated. In addition, they will not only receive the economic benefit if there is a death of the final or primary beneficiaries. They will also do so if these beneficiaries cease to be beneficiaries for any reason assessed in the policy.
  • In the event that there are several contingent beneficiaries, the percentage that each one must receive must be established.
  • Establishing these beneficiaries is a way to ensure that the assets remain in the family of the person who takes out the insurance.
  • The contingent beneficiary is not required to accept the award and may decline it. He is not required to sign the policy that lists him as a contingent beneficiary.

In what insurance is this figure used?

Life insurance is the contract in which this figure of the contingent beneficiary is usually established. In some contracts, even establishing this type of beneficiary becomes obligatory to make the policy effective.

Life insurance covers the contingency in case of serious illness or death of a person. The person contracts this service, forcing himself to pay a premium in exchange for the insurance company, once the accident occurs, delivering the corresponding economic benefit to the beneficiaries indicated in the policy.

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This type of insurance is considered as a protection system for the family.

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