Anyone can be named as a beneficiary for a life insurance policy. A beneficiary is anyone who receives the benefit or payout from a life insurance policy. There are three types of life insurance beneficiaries: the primary beneficiary, the secondary, and final beneficiaries. The primary beneficiary is the main person or persons you name in your policy’s declaration forms to receive your life insurance payout. You can split the payout anyway that you like on these forms. It is important to note that life insurance companies are bound by law to payout the person or persons on your beneficiary declaration forms. They do not follow any directives from a last will and testament. So, you must ensure that your beneficiary declaration forms are up-to-date with the correct beneficiaries listed receiving the amounts that you would like.

The secondary beneficiary is a person who would receive the life insurance benefits should your primary beneficiary die before you and if you had not updated your beneficiary declaration forms. For example, in my insurance policies, my wife is my primary beneficiary and my mother is my secondary beneficiary. This would also payout to my mother should my wife and I happen to die at the same time, in an accident, for example.

Although many life insurance policyholders do not go beyond naming primary and secondary beneficiaries, they can also name a final beneficiary as well. Final beneficiaries are the last persons to receive your life insurance proceeds and are only paid if they survive all other beneficiaries. Many people may name aunts, uncles, or nieces and nephews as final beneficiaries if they name any.

Another entity that can be named as either a primary, secondary, or final beneficiary to a life insurance policy is a charity. Many middle class Americans do not consider this option, but it is found quite frequently among the wealthy. Leaving money through a life insurance policy to a charity can be an option for people who do not have children or who want to provide a large gift to an institution such as a college at the time of their death. Of course, any legitimate charity can help you find out more details about listing them on your life insurance beneficiary forms. Just remember, like a family member, the charity needs to be properly listed on these forms if you would like life insurance proceeds to go to them at the time of your death. A last will and testament is a place to give money and other assets outside of your life insurance to people and charities.