Contingent Beneficiary
Contingent Beneficiary: What is a Contingent Beneficiary? Meaning, Example and FAQs
What is a Contingent Beneficiary in insurance: A person designated to receive the policy benefits if the primary beneficiary is unable to do so.
Why is it important to name a Contingent Beneficiary in a policy: Secondary beneficiary if primary is unavailable.
How does a Contingent Beneficiary receive the policy benefits: Receives benefits if primary beneficiary cannot.
Who can be designated as a Contingent Beneficiary: Policyholder, beneficiaries, insurer
Which types of insurance policies commonly have a Contingent Beneficiary: Life insurance
When does a Contingent Beneficiary become entitled to receive the claim payout: At claim payout
Case Study: Background: Mr. Rajeev Sharma, a 42-year-old bank officer from Lucknow, purchased a term life insurance policy for ₹1 crore to secure his family’s future. In his policy nomination, he named his wife, Mrs. Pooja Sharma, as the primary beneficiary, and his minor son, Aarav Sharma, as the contingent beneficiary. Incident: Unfortunately, Rajeev and Pooja were both involved in a tragic car accident and passed away together. Outcome: Since the primary beneficiary (Pooja) was no longer alive, the insurance company followed the policy’s nomination clause and paid the death benefit of ₹1 crore to the contingent beneficiary, Aarav, through a legal guardian appointed by the court. This ensured that the family’s financial security was protected as Rajeev intended. Key Insight: A contingent beneficiary in India is a backup beneficiary who receives the policy proceeds if the primary beneficiary is deceased or unable to claim. Naming a contingent beneficiary helps avoid legal complications and ensures smooth claim settlement in unforeseen circumstances.
