Also found in: Legal.
A contingent beneficiary receives the proceeds of an insurance policy, term-certain annuity, individual retirement account (IRA), employer-sponsored retirement savings plan, will, or trust if the primary beneficiary dies before the benefit is paid or if he or she declines to accept the benefit.
For example, if you name your spouse as the primary beneficiary of your IRA, you might name your children as contingent beneficiaries. Then, if your spouse is not alive at your death, your children inherit your IRA directly.
It's often a good idea to name as contingent beneficiary someone who is younger than you and your primary beneficiary, increasing the chances that the contingent beneficiary will outlive you. Or, if you choose, you might name an institution or a trust as contingent beneficiary.
You have the right to change your designation of contingent beneficiaries, except in the case of an irrevocable trust or a life insurance policy whose terms and conditions were established in a court ruling.
A contingent beneficiary may also be someone who is entitled to inherit assets if he or she meets the terms of the will or trust granting those assets.