Revocable vs Irrevocable Beneficiary
A revocable beneficiary can be changed anytime by the owner without consent and holds no vested rights. An irrevocable beneficiary's designation cannot change, and policy loans, assignments, or option changes need that beneficiary's written consent.
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Practice This Concept
The key difference between a revocable and an irrevocable beneficiary designation is that:
An irrevocable beneficiary's consent is required before the policyowner can change the designation — With a revocable beneficiary, the policyowner may change the designation at any time without the beneficiary's consent. With an irrevocable beneficiary, the designation cannot be changed without that beneficiary's written consent because the irrevocable beneficiary holds a vested contractual interest in the policy. This distinction matters in estate planning and divorce settlements, where irrevocable designations are used to guarantee a benefit to a specific person.
National insurance concept
A policyowner who is not the insured dies before the insured. Which statement best describes what happens to the life insurance policy?
The policy passes to the policyowner's estate or a successor owner, and coverage on the insured's life continues — A life insurance policy is a valuable contract asset owned by the policyowner. If the owner dies, the policy does not lapse: it passes to the owner's estate or to a designated successor owner, and the coverage on the insured's life continues in force. The new owner steps into the ownership rights - changing the beneficiary, borrowing, assigning, or surrendering - subject to the consent rights of any irrevocable beneficiary. The insured's death, not the owner's, triggers payment of death proceeds, and a revocable beneficiary's interest vests only when the insured dies while the policy is in force.
National insurance concept