Under what circumstance do beneficiary designations NOT require insurable interest?

Beneficiary designations do not require insurable interest for any type of beneficiary, which is why this answer is considered correct. In life insurance, the concept of insurable interest is crucial when the policy is initially taken out—this means that the policyholder must have a legitimate interest in the continued life of the insured. However, once the policy is established, the requirement of insurable interest no longer applies to the designation of beneficiaries.

This means that the policyholder can name individuals or entities as beneficiaries regardless of whether they have an insurable interest in the life of the insured. This is particularly important because it allows policyholders considerable flexibility in determining who will receive the policy benefits upon their death.

In contrast, primary beneficiaries refer to the first designated individuals or entities who will receive the death benefit. Contingent beneficiaries are those designated to receive benefits if the primary beneficiaries are unable to do so. Both of these categories do not require insurable interest for the beneficiary designation, which reinforces that the correct answer encompasses all types of beneficiaries.

Moreover, trust beneficiaries, while having specific legal considerations, also fall under the same umbrella—no insurable interest requirement is placed upon them when they are designated as recipients of benefits. Overall, the principle that beneficiary designations