A frequent beneficiary designation amongst families would be to have the two parents name each other as primary or first-payor beneficiaries and the children as contingent or second-payor beneficiaries. There’s a potential problem with this however, if you have more children and forget to update your beneficiary designations.
If you have this type of setup where your eldest children are named beneficiaries but the youngest are not named, and you should both pass away, the insurance company is not likely to override your decision. The eldest children will receive benefits, and your youngest will not receive any.
How to correct this? First, go check your beneficiary designations right now! Make sure it’s as you expect.
Secondly, if you are still having children, name each parent as primary beneficiary and leave your secondary or contingent beneficiary blank. With no named contingent beneficiaries, if both parents passed away the death benefits would bounce back to the insured’s estate. The estate would likely then be probated and proceeds would be distributed per the will – likely to all children. This works best if you’re still having children because your will should be robust enough to look after future children (your life insurance policy is not that robust). There’s some minor drawbacks (delays in processing and some increased fees) but it’s better than having some of your children receive no benefits.
Conversely, if you are not expecting any more children and you want your children as contingent beneficiaries, then I suggest you actually name all your children explicitly in your life insurance. This ensures there are no probate fees or delays attached to getting your life insurance proceeds into the hands of your children.
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