Does my life insurance beneficiary have to be a relative or can I select someone else?

UPDATED: Jul 9, 2012

Advertiser Disclosure

It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance company and cannot guarantee quotes from any single insurance company.

Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.

UPDATED: Jul 9, 2012Fact Checked

Free Insurance Comparison

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

Asked July 9, 2012

1 Answer

The owner of a life insurance policy has the option of naming any beneficiary they choose. Most of the time, the beneficiary is paid out to the nearest relative or a group of relatives, but those are not the only options available. You could leave the proceeds of the policy to anyone you choose, or even to a non-living entity.

One example of a non-relative being named the beneficiary would be if you chose to name your best friend as a beneficiary. Since the insurance company is only concerned with insurable interests for the insured, there is no complication in naming a person who has no direct dependence on you. It is even possible to name a pet as the beneficiary, and that has been done many times, where the insured person wishes to make certain that their favorite cat, dog, or horse would be well-taken care of after the insured person passes away.

Other examples of leaving the proceeds to someone other than a relative would be charities or trusts. If you wished, you could leave the entire settlement to research for cancer, or even organizations such as AARP, the Moose Lodge, or fringe organizations such as NORML. If you have something that you believe strongly in, no matter what it is, you are free to name it as the beneficiary. There is no restriction on who that could be.

If you are going to leave the proceeds of the policy to someone other than a relative, look into the most effective way to do so. With careful planning, the recipient can avoid paying taxes on the inheritance. To do this talk with your insurance agent or contact a lawyer which specializes in estate law.

Answered July 9, 2012 by Anonymous

Free Insurance Comparison

Compare quotes from the top insurance companies and save!

secured lock Secured with SHA-256 Encryption