Per Stirpes in Life Insurance: How It Determines Beneficiary Shares

What Per Stirpes Means

Per stirpes, a Latin phrase meaning "by branch," is a method for distributing a life insurance death benefit when a named beneficiary predeceases the insured. Under this rule, the deceased beneficiary's share is divided equally among their heirs, preserving the original intent of the policy owner.

How It Works in Practice

If you name your spouse and a child as primary beneficiaries and your spouse dies first, the entire benefit goes to the child. If you name multiple heirs who die before you, each dead beneficiary's portion is split among that beneficiary's heirs. The policy's beneficiary list dictates the exact division.

Per Stirpes vs. Per Capita

Per capita, meaning "by head," divides the benefit equally among all named beneficiaries, regardless of death. Per stirpes protects against a beneficiary's death by reallocating their portion, while per capita keeps the original split unchanged.

Choosing the Right Designation

Use per stirpes when you want the policy to follow your family tree, ensuring that a deceased beneficiary's heirs receive their share. Per capita is simpler but can leave a portion of the benefit unclaimed if a named beneficiary dies. Reviewing your beneficiary designations regularly is essential after major life events.

Common Misconceptions

Some assume that per stirpes automatically applies to all policies; it only applies if you explicitly select it. Additionally, the rule does not apply to contingent beneficiaries unless specified.