Primary Co-Beneficiary

• The insurance company will check whether any co-beneficiaries are on the policy. If so, the policy would be split up among multiple beneficiaries. If one beneficiary dies, then the policy pays out the remaining money to the living beneficiaries.
  
  

Secondary Beneficiary

• If primary beneficiaries are not alive to collect the payout, the insurer will check for secondary beneficiaries. A secondary beneficiary is someone who accepts the money if all primary beneficiaries are not living. This is to be treated as a "back-up" just in case the primary beneficiary or beneficiaries are no longer living. An example of this would be if you leave money to your spouse, but name your child as the secondary beneficiary. You might not want the child to receive the death benefit unless your spouse is dead. In this case, your child would only receive the money if your spouse were to die prior to you. This is contrasted with naming your child as a co-beneficiary, in which the child and your spouse would receive the death benefit.
  
  

Estate

• If no beneficiaries are alive, the policy will be paid to your estate. The death benefit passes through probate and is subject to the fees and procedures outlined by the court. The money will be distributed according to your will. If no instructions are specific to cash proceeds, the laws in your state or the court will decide what happens to the money.
  
  

Consideration

• Always name multiple beneficiaries. This ensures that your money goes to somebody rather than passing through probate. Probate costs money, while passing the money directly to your heirs costs nothing. Also, update your beneficiaries from time to time. If a beneficiary dies, make the necessary changes on your policy immediately.