You can name any legally competent person as a beneficiary of your life insurance policy, including your spouse, children, other relative or friend. You can also name an entity as a beneficiary, such as a charity, church or trust.

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It's a good idea to designate a contingent beneficiary as well as a primary beneficiary. If your primary beneficiary cannot be located or dies before you do, the life insurance proceeds go to your contingent beneficiary. Be very specific when naming a beneficiary; include full name and Social Security number to avoid any confusion.

Other important factors

Here are a few additional notes about designating a beneficiary:

Trusts. A trust is a legal document that transfers money from you to another person or institution who will manage the proceeds for the benefit of a third person. Make sure to have the appropriate legal paperwork in place when you designate the trust as beneficiary.

Power of attorney. If you give someone power of attorney, indicate whether or not that person can make changes to your designated beneficiary.

Community property states. Remember that in community property states, your spouse is entitled to half of everything. Such states include Arizona, California, Idaho, Nevada, New Mexico, Texas, Washington and Wisconsin.

It's a good idea to review your beneficiary designation regularly to make sure it still reflects your wishes. Major life events such as births, deaths or marriages are good times to confirm you have the appropriate person or entity designated as the beneficiary of your life insurance policy.

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