Must life insurance beneficiary be spouse?

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Dear Insurance Adviser,
My wife took out a $20,000 life insurance policy on herself, and she pays the premiums with household money. But instead of making me the beneficiary, she put down the name of her son from a previous marriage. Is this legal?
— R.J.

Dear R.J.,
Yes, it is legal to name a blood relative as the beneficiary on a life policy. It’s also legal to name other persons or an organization as a beneficiary on a life insurance policy.

The insurance company writing the policy tries to make sure the beneficiary being named has an “insurable interest” — in other words, that he or she will suffer a financial loss upon the insured’s death. Two exceptions that don’t require proof of insurable interest between the person insured and the beneficiary are: if there is a blood or familial relationship between the two, or if the beneficiary is a named charity.

So, for example, you couldn’t name a Hollywood idol such as Brad Pitt as the beneficiary of your life insurance policy. Unless, of course, you are Brad’s father.

The bottom line is that it is indeed legit for your wife to name her son from a prior marriage as the beneficiary of her life policy. This begs the question of why she felt the need to take out this separate policy. Perhaps the son hasn’t been included as a co-beneficiary on life insurance you and your wife have together, and she’s feeling badly about that?

It’s probably time to ask her.

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