One Beneficiary Mistake You Really Don’t Want to Make
Per capita or per stirpes? Ensure fairness across generations by choosing the right annuity or life insurance distribution method for your beneficiaries.

Once you’ve bought an annuity or a life insurance policy and named your beneficiaries, you may never think about those beneficiary designations again. But that could be a big mistake.
If you get divorced and remarry but fail to change your beneficiary from your ex-spouse to your current spouse, your ex will receive the proceeds. Besides divorce, other life changes, such as marriage or the death of a loved one, are occasions to review beneficiaries.
Additionally, there may be new people in your life that you want to include — such as grandchildren. Maybe there’s a charitable organization that you wish to support.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Before making any changes, it’s important to understand how primary and contingent beneficiaries work.
If you’re married, your spouse is normally your primary beneficiary and your child or children are contingent. The contingent beneficiaries will receive the proceeds on your death if your primary beneficiary dies before you do or at the same time as you do.
While you should notify the insurer about the death of a primary beneficiary, even if you don’t, the proceeds will automatically go to your contingent beneficiaries.
Fairness across generations
If you have a number of grandchildren, the issue becomes more complex.
Suppose you’re married and have three adult children. The default is to name your spouse your primary beneficiary and name your children contingent beneficiaries who’ll all share equally in the proceeds.
Here’s where it gets complicated. Suppose child A has three children, child B has none and child C has two, for a total of five grandchildren.
What would happen if both your spouse and child C predecease you? In that case, unless you’ve set up your beneficiaries correctly, all the proceeds would go to your two surviving children. Child C’s two children would be disinherited.
That’s not what most people want.
Instead, you can specify that if one of your children is deceased that their share will go to his or her children. This is called a per stirpes distribution.
That means that each branch of the family will receive an equal share. If that’s what you want to do, you must request per stripes, because equal distribution (per capita) is the default.
Per stirpes designations are available from most but not all insurance companies.
Beneficiary designations trump your will: So get them right
Because annuities, life insurance policies and retirement plans list beneficiaries, they all bypass probate court. That means that your will won’t determine who gets the proceeds — which is why having the right beneficiaries is so crucial.
My brief video about using per stirpes is online at https://www.youtube.com/watch?v=rOBK-nVYxgA.
A free quote comparison service with interest rates from dozens of insurers is available at https://www.annuityadvantage.com or by calling (800) 239-0356.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Retirement-income expert Ken Nuss is the founder and CEO of AnnuityAdvantage, a leading online provider of fixed-rate, fixed-indexed and immediate-income annuities. Interest rates from dozens of insurers are constantly updated on its website. He launched the AnnuityAdvantage website in 1999 to help people looking for their best options in principal-protected annuities. More information is available from the Medford, Ore., based company at www.annuityadvantage.com or (800) 239-0356.
-
Cruise Lines Sue to Block Hawaii’s New Climate Tourism Tax
State Tax Your vacation to the Aloha State could come at a higher price tag next year. Here’s why.
-
How AI Puts Company Data at Risk
The Kiplinger Letter Cybersecurity professionals are racing to ward off AI threats while also using AI tools to shore up defenses.
-
From Job Loss to Free Agent: A Financial Professional's Transition Playbook (and Pep Talk)
The American workforce is in transition, and if you're among those affected, take heart. You have the skills, experience and smarts that companies need.
-
A Financial Planner's Top Five Items to Prioritize When Your Spouse Is Ill
During tough times, it's easy to overlook important financial details, but you'll be so much better off if you take care of these things right now.
-
An Expert Guide to Outsmarting Inflation: Don't Let It Restrict Your Retirement
Inflation is often underestimated when estimating retirement income, education funding or investment returns. These strategies can help preserve your purchasing power and reduce your financial anxiety.
-
Your 401(k) Options Just Got More Complicated: Here's What You Need to Know
Private equity, real estate and expanded annuities are now options, but they are more complex, less flexible and more expensive to own.
-
One Big Beautiful Bill, One Big Question: Will We Keep Giving?
The rules on charitable giving are changing. For some, tax deductions for donations are now an option. For others, that option may have been curtailed.
-
I'm a Financial Planner: Here Are Five Phases of Retirement Planning You Have to Get Right
A solid retirement plan is a must, but you can't go halfway. Neglecting just one area of your plan could cause the whole thing to collapse.
-
An IRS Enrolled Agent's Top 10 Reasons to Stop Doing Your Own Taxes
Taxes can get complicated quickly, and the more money you have, the tougher they tend to be. So, if you have any of these 10 tax situations, don't risk it.
-
Greed, Fear and Market Volatility: A Financial Adviser's Guide to Keeping Emotions Out of Investment Decisions
Don't panic! And don't be so confident in the stock market that you overlook risk. Instead, be logical. Your retirement security could depend on it.