Simply stated, a primary beneficiary is the first person entitled to receive the benefits, and a contingent beneficiary is next in line. As the name insinuates, primary beneficiaries have the first right to claim the benefits.
In theory, any adult in your life can be named a contingent beneficiary, be they extended family, friends, co-workers and much more. Estates can also be named a beneficiary. You can even, if you want to give your money away after your passing, name a charity or nonprofit organization as a beneficiary.
In insurance contracts, a contingent beneficiary is one who benefits when the prior beneficiary of the policy is unable receive the benefit. In Texas, if a beneficiary of a life insurance forfeits one's interest in the policy, the contingent beneficiary named by the insured can receive the proceeds.
Do I Need a Contingent Beneficiary? Yes. It's smart to always name a contingent beneficiary. Without this designation, should your primary beneficiary be unable to accept assets passed to them for any reason at all, proceeds would then go back to the estate and end up in the often lengthy and costly process of probate.
Your clients should not name their minor children as direct or contingent beneficiaries, since a life insurance company can't pay out proceeds directly to children until the children reach the age of majority, typically 18 or 21, depending on state law.
A beneficiary can be a person, charity, business or trust. If the beneficiary is a person, they can be a relative, child, spouse, friend or anyone else you happen to know. As some agents like to say, you can even name your "secret lover" as a life insurance beneficiary.
Can I Have Two Primary Beneficiaries? Yes, you can have more than one primary beneficiary. Also called co-beneficiaries, these multiple primary beneficiaries will share your death benefit equally or receive the sum based on a predetermined percentage.
If the beneficiary dies first, then it is paid to the estate of the policy owner. If the beneficiary dies after, then the death benefit is paid to the estate of the beneficiary. The best way to ensure that someone you choose gets your policy's death benefit is by adding contingent beneficiaries.
To receive a spouse benefit, you generally must have been married for at least one continuous year to the retired or disabled worker on whose earnings record you are claiming benefits. There are narrow exceptions to the one-year rule.
Rules governing 401(k) plans require that account assets automatically go to the person who is your spouse when you die – unless you get your spouse to relinquish his or her claim to the assets and file the required paperwork with your employer demonstrating this and designating your intended beneficiaries.
If you are divorced, your ex-spouse can receive benefits based on your record (even if you have remarried) if: Your marriage lasted 10 years or longer. Your ex-spouse is unmarried.
In terms of how much either spouse is entitled to, the general rule is to divide pension benefits earned during the course of the marriage right down the middle. Though that means your spouse would be able to claim half your pension, they are limited to what was earned during the course of the marriage.
A surviving spouse can collect 100 percent of the late spouse's benefit if the survivor has reached full retirement age, but the amount will be lower if the deceased spouse claimed benefits before he or she reached full retirement age.
How much can a family get? Within a family, a child can receive up to half of the parent's full retirement or disability benefits. If a child receives survivors benefits, they can get up to 75% of the deceased parent's basic Social Security benefit.
If you have since remarried, you can't collect benefits on your former spouse's record unless your later marriage ended by annulment, divorce, or death. Also, if you're entitled to benefits on your own record, your benefit amount must be less than you would receive based on your ex-spouse's work.
| Year | Amount |
|---|---|
| 2019 | $132,900 |
| 2020 | $137,700 |
| 2021 | $142,800 |
| 2022 | $147,000 |
The full retirement age is 66 if you were born from 1943 to 1954. The full retirement age increases gradually if you were born from 1955 to 1960 until it reaches 67. For anyone born 1960 or later, full retirement benefits are payable at age 67.
WHAT IS THE RESOURCE LIMIT? The limit for countable resources is $2,000 for an individual and $3,000 for a couple.
At 65 to 67, depending on the year of your birth, you are at full retirement age and can get full Social Security retirement benefits tax-free.