The beneficiary is the person or entity named as the recipient of your policy's death benefit. It can be a family member, a person unrelated to you, or even a business or other organization. You choose the beneficiary on your own--you don't need permission from the insurer or the beneficiary. You can also choose more than one beneficiary, and designate how you want the death benefit to be split among them.
Your insurer will automatically disburse the death benefit if you die, but it's still a good idea to tell any beneficiary about the policy so he or she will be prepared to take action should a problem arise. For this same reason it's also a good idea to provide the beneficiary with access to the contract.