Which types of beneficiaries can be designated in a life insurance policy?

In a life insurance policy, it is possible to designate multiple types of beneficiaries, which include primary, contingent, and tertiary beneficiaries.

Primary beneficiaries are the first in line to receive the death benefit when the insured passes away. If the primary beneficiary is deceased or cannot be found at the time of the insured’s death, the contingent beneficiary takes over. This ensures that there is a backup plan for the distribution of benefits, providing security for the policyholder by allowing for the designation of alternatives.

Tertiary beneficiaries, although less commonly discussed, can be designated to receive benefits in case both primary and contingent beneficiaries are unable to fulfill their roles. This structure adds an extra layer of security and allows policyholders to ensure that their intended beneficiaries receive the proceeds.

The other options are limited in scope; they do not encompass the full range of beneficiary types available. While revocable and irrevocable are important distinctions in terms of how benefits can be altered by the policyowner, they do not adequately address the types of beneficiaries that may be named. Thus, the correct and comprehensive designation includes primary, contingent, and tertiary beneficiaries to fully cover the policyholder's intent for benefit distribution.