What are per capita and per stirpes life insurance beneficiaries?

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When you buy a life insurance policy, you’ll have to designate beneficiaries to receive the death benefit. If you have two beneficiaries, they’ll each receive 50% of the death benefit. And if you have four beneficiaries, they’ll each receive 25%. This is called a per capita death benefit.

If one of your beneficiaries dies before the death benefit is paid out, the remaining beneficiaries will split their share of the death benefit. But if you want to ensure the death benefit protects the deceased beneficiary’s family, you’ll need to designate your beneficiaries as per stirpes. Read on to learn more about the two types of death benefit designations and which one is right for you.

What is a per capita death benefit?

Per capita is the default method for life insurance policies to be distributed. Meaning “by head” in Latin, the death benefit will be divided equally among all of your beneficiaries. 

For example, if you have a life insurance policy with a death benefit of $500,000 and three people listed as your beneficiaries, your death benefit would be divided equally among them, each receiving $166,666. If one beneficiary has passed away, their share will be divided among the remaining beneficiaries.

You do not need to designate a per capita death benefit in your policy — it is automatic. 

What is a per stirpes death benefit?

Per stirpes means “by branch” in Latin. With this designation, the death benefit will be divided among your beneficiaries according to their family branch.

For example, if one of your beneficiaries has passed away, their share will be divided among their children rather than the remaining beneficiaries. This ensures that the deceased beneficiary’s share of the death benefit goes to their family, rather than being divided among the surviving beneficiaries.

For example, if you have two children, and each child has two children of their own, you’ll likely list your children as the beneficiaries on your life insurance policy. If you indicate in your policy that this will be a per stirpes distribution and one of your children passes away, their share of the death benefit would be divided equally among their own two children, rather than split between the remaining beneficiaries. 

Should you choose per capita or per stirpes?

The distribution method you choose for your life insurance policy depends on your family situation. Here are a few factors to consider:

• If you have a small number of beneficiaries and want to divide your death benefit equally among them, per capita is the best option for you.
• If you have many beneficiaries or want to ensure your death benefit goes to your beneficiaries’ heirs, per stirpes is a better option.
• If you want to ensure that your death benefit goes to specific people, rather than being divided equally among all of your beneficiaries, you can name them as primary beneficiaries and use a per stirpes distribution.

How to designate a per capita or per stirpes death benefit 

Designating a per capita death benefit is easy — you don’t have to do anything. Your death benefit designation is automatically registered as per capita.

To register a death benefit designation as per stirpes, you will write per stirpes next to your beneficiary’s name when you list them in your policy. It will look like this: Beneficiaries name (per stirpes). 

Ultimately, the death benefit distribution method you choose should reflect how you want the death benefit to be distributed to your loved ones. Reviewing your beneficiary designations regularly is important to ensure they reflect your wishes and your family situation.

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