Plain Policy Guide
Life Insurance Basics

How to Choose Life Insurance Beneficiaries (and Avoid Common Mistakes)

Your beneficiary designation decides who gets your life insurance, and it can override your will. Here is how to name primary and contingent beneficiaries, handle minor children and keep everything up to date.

By Plain Policy Guide Editorial Team Published 2 min read

Buying life insurance is only half the job. The beneficiary form decides who actually receives the money, and a vague or outdated designation can send it to the wrong person, delay payment for months or put it through probate. Here is how to get it right, based on guidance from the NAIC.

Primary and contingent beneficiaries

  • Primary beneficiaries receive the death benefit first.
  • Contingent (secondary) beneficiaries receive it if no primary beneficiary is alive when you die.

If you name several people, the NAIC suggests stating the percentage each should receive, or "equal shares." Without a contingent beneficiary, the money may go to your estate if your primary beneficiary dies before you.

Naming children: be careful

Insurance companies generally don't pay benefits directly to minors. The NAIC describes several options:

  • A trust as beneficiary, with a person or institution managing the money for your children's welfare. This needs careful setup with an attorney or tax adviser.
  • Two trusted adults as beneficiaries, who make joint decisions about your children's care.
  • Your estate, which can then manage the money under your will, though this can involve probate.

As your children grow up, update your choices.

"Per stirpes" vs. "per capita"

If you name a group, such as "my children," the NAIC suggests adding one of these terms, because they divide the money differently when one member of the group has died:

TermWhat it meansExample: 3 children named, one has died leaving 2 kids
Per stirpes ("by branch")A deceased beneficiary's share passes down to their descendantsEach living child gets 1/3; the deceased child's two kids split the remaining 1/3
Per capita ("by head")The money is split among the named beneficiaries who are aliveThe two living children split everything, 1/2 each

Simplified illustration. Policy wording varies; ask your insurer how it applies these terms.

Keep your designation up to date

The NAIC recommends reviewing your policies every year and after major life events: births, adoptions, marriages, divorces and deaths. As the policy owner, you can usually change beneficiaries at any time, at no cost, with a written request to your insurer.

A common mistake

Forgetting to update a beneficiary after a divorce or remarriage. The beneficiary on the policy form generally controls who receives the money, even if your will says something else.

Make it easy for your family

  1. Check the details: make sure your personal information is correct and each beneficiary's Social Security or tax ID number is on file.
  2. Tell your beneficiaries about the policy and the insurer's name, or share it with your attorney or accountant.
  3. Store a copy of the policy with your will or estate papers where your family can find it.
  4. If a policy is lost, the NAIC's free Life Insurance Policy Locator can help beneficiaries find it.

What beneficiaries receive

Death benefits are generally not taxable income for beneficiaries, though interest on them is. See is life insurance taxable? To decide how much coverage to leave, read how much life insurance you need.

Next guideLife Insurance for Seniors: Options and Costs After 60

Frequently asked questions

Can I name my minor child as a beneficiary?

You can, but insurers generally won't pay a minor directly, which can mean court involvement. The NAIC suggests naming a trust or estate to manage the money, or naming trusted adults to make joint decisions for your children. Talk to an attorney about setting up a trust.

What happens if my beneficiary dies before me?

If you named a contingent beneficiary, they receive the benefit. If you didn't, the money may go to your estate, which can delay payment and expose it to probate.

Does my will override my beneficiary designation?

Generally no. The beneficiary designation on the policy usually controls who receives the death benefit, which is why it's important to keep it up to date.

How do I find a life insurance policy after someone dies?

The NAIC's free Life Insurance Policy Locator searches participating insurers for policies and annuities in the deceased person's name.

Sources

  1. What Should I Know About Life Insurance Beneficiaries? (October 12, 2026), NAIC
  2. Consumer Insight: Life Insurance, NAIC
  3. Life Insurance Buyer's Guide, NAIC
  4. Life insurance & disability insurance proceeds, Internal Revenue Service

Sources were checked on October 15, 2026. Laws, fees and prices change; always confirm with your state agency or insurer.

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