There are two types of beneficiaries typically referred to in legal and financial contexts:
1. Primary beneficiary: This is the individual or entity designated to receive the benefits of a will, trust, retirement account, or life insurance policy when a policyholder or account owner passes away. The primary beneficiary has the first claim to the asset or benefits.
2. Contingent (or secondary) beneficiary: This beneficiary is second in line to receive the benefits, but the right to do so is contingent on the primary beneficiary’s being unable or unwilling to accept the benefits. This could be due to the primary beneficiary’s passing away, becoming incapacitated, or refusing the inheritance before the benefits are distributed.