Which type of beneficiary can be named in a life insurance policy?

A life insurance policy allows the policyholder to designate a beneficiary who will receive the death benefit upon the policyholder's passing. The correct response indicates that any individual or entity can be named as a beneficiary, providing the policyholder with flexibility in selecting who or what organization will benefit from the policy.

This broad range includes family members, friends, business partners, charitable organizations, trusts, and even entities such as corporations. The ability to name any individual or entity as a beneficiary reflects the principle that the policyholder has the right to determine how their assets should be distributed upon their death, and it allows for personal and financial planning that suits their specific needs and circumstances.

Other choices are limited by design. For instance, suggesting that only family members can be beneficiaries restricts the policyholder’s freedom to choose. Likewise, the notion that only legal heirs can be named overlooks the fact that a person may wish to provide for others outside of their legal heirs. Finally, limiting beneficiaries to charitable organizations excludes many viable options that could be meaningful to the policyholder.