What is the mortgage protection contingent beneficiary?

First of all, what is mortgage protection? It is a term structured life insurance built around the mortgage that pays it off upon death or upon living benefits getting triggered. Now, what is a beneficiary? The beneficiary is the person that receives the benefits of the policy upon your death. If it’s a living benefit that is triggered, the benefit always comes to you because you’re still alive. But upon death, it goes to your primary beneficiary, and potentially to your contingent beneficiary.


Let’s say your primary beneficiary is your spouse. You’re both on a car ride, and get in a car accident and you both pass away. 

If you don’t have a contingent beneficiary, the policy permanently pays to the state where you live. If you have a contingent beneficiary, however, only in this or similar situations, would the benefit then pay to your contingent beneficiary. 

So this is why we set up a contingent beneficiary. You can think of it as a safety net. So with your mortgage protection policy, you pass away your primary beneficiaries, pass away it goes your contingent. Another situation that does arise, situations where the insured that would probably be you, where insured people forget to update their mortgage protection policy, details, their beneficiary details when maybe their spouse passes away down the road or let’s say initially your primary beneficiary is not a spouse.

Let’s say it’s a child or it’s a parent or something else.

And so at some point, that person passes away before you do. And with mourning and going through all the difficulty of dealing with that, you forget to update your information with the insurance carrier and then you pass away at some point. Now, there’s no one for the money to go to. What happens? This is very important for you to understand when your mortgage protection policy pays. Due to your death. Again, this is only for death benefits, living benefits, another situation always just comes to you, but for the death benefit.

If there’s no one alive that’s named within your primary beneficiaries or your contingent beneficiaries, then that money goes to the state that you live in and no one in your family is going to have a claim to it. So you must name someone as a beneficiary.

Also know that if you don’t have someone in mind right now, and this happens many times with our clients, then you can just start with your primary beneficiary or even multiple beneficiaries, and you can always name a contingent beneficiary later. But now you understand what are the benefits of naming a contingent beneficiary and what exactly is a contingent beneficiary?

If you have any other mortgage protection questions, please reach out to us. We’re happy to help any time. Beyond that, stay safe out there.