Beneficiary Share Splitter

How the beneficiary share splitter works

When a life insurance policy pays out, the money goes to the people named on the beneficiary form in the proportions listed there. This tool turns those percentages into dollar amounts, so you can see exactly who would receive what before you finalize your designation.

How the splitter works

Enter the total death benefit and the percentage for each of up to four beneficiaries. The tool multiplies the payout by each percentage and displays the amount. At the top it shows the total you have allocated and warns you if your shares do not add up to exactly 100 percent. If they total less, part of the payout may have no clear recipient. If they total more, the form may be rejected or delayed.

Primary and contingent beneficiaries

A primary beneficiary is first in line. A contingent beneficiary receives the money only if the primary beneficiary has died or cannot be found. Always name contingent beneficiaries, otherwise the proceeds can end up in your estate, where they may be delayed by probate and exposed to creditors. This calculator is best used to plan primary shares, and you can run it again to plan the contingent split.

Example

Imagine a $500,000 policy. You leave 50 percent to your spouse, 25 percent to an adult child, 15 percent to a second child and 10 percent to a charity. The tool shows $250,000, $125,000, $75,000 and $50,000. If you changed the charity to 15 percent, the total would reach 105 percent, and the tool would flag the problem immediately.

Special situations

Minors cannot usually receive a large payout directly. Courts may appoint a guardian to manage the funds, which adds time and expense. Many families instead name a trust or use a custodian under the Uniform Transfers to Minors Act. If a beneficiary receives government benefits, an inheritance could affect eligibility, so a special needs trust may be appropriate. Ask a qualified estate lawyer about these cases.

Keep your form current

The beneficiary form generally overrides your will, so mistakes can be costly. Review it after marriage, divorce, births, deaths and big changes in your relationships. Be specific by using full legal names and relationships, and consider per stirpes language if you want a share to pass to a person's children if they die first.

Limitations

This tool is for planning only and does not change any policy. The legal designation must be made through your insurer, and rules vary by state and by country. Taxes and fees are not considered.

Frequently asked questions

Reviewed by Umer Shabbir, 10+ years in insurance and personal finance.