Which of the following best describes a contingent beneficiary?

A contingent beneficiary is indeed a secondary beneficiary who will receive benefits if the primary beneficiary cannot. This situation arises typically in the event that the primary beneficiary predeceases the policyholder or is otherwise unable to claim the benefits outlined in the policy. The contingent beneficiary serves as a backup to ensure that the policy proceeds are distributed according to the policyholder's wishes, thereby providing a layer of security and assurance that assets will not go unclaimed.

In life insurance and estate planning, having both primary and contingent beneficiaries allows for a clear succession plan, which can prevent legal complications and ensure that the policyholder's intentions are honored, even when circumstances change. By designating a contingent beneficiary, the policyholder is actively planning for scenarios where the initial beneficiary may no longer be able to fulfill that role.

The other options present scenarios that either misunderstand the role of a contingent beneficiary or incorrectly define other types of beneficiaries, which helps clarify why the correct choice stands out.