A provision in a life insurance contract that allows the policy owner to change the beneficiary designation is called the change in beneficiary. In most cases, after the policy is issued, the owner of a policy can change beneficiaries as desired. An exception to that rule is when an irrevocable beneficiary has been designated in which case the owner must have written permission from the beneficiary in order to make a change.
Change of beneficiary can be very useful because of the insurable interest that must exist in order for a policy to be underwritten. In other words, in order for a policy to be issued, the beneficiary designated must have some sort of personal or business ties to the proposed insured – otherwise known as insurable interest. Generally this includes family members, significant others, or indications of some sort of business interest.
Same sex relationships have posed a potential problem in the past since same sex couples are often not recognized as demonstrating insurable interest. One perfectly legal way around this has been to designate someone with insurable interest in the beginning, and once the policy is issued to change the beneficiary to another individual. Insurable interest is not required to keep a policy in force, only to issue the policy.