A policyowner of a revocable life insurance policy wants to change the beneficiary to a new name. Which party holds the exclusive right to make this change?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The policyowner holds all ownership rights under a life insurance policy, including the right to name and change the beneficiary while the designation is revocable. The insured has no ownership rights unless he or she is also the policyowner; merely being the person whose life is insured confers no authority over the contract. The beneficiary has no power to approve or block a change under a revocable designation, and the insurer merely administers the owner's written request rather than exercising independent discretion. The change normally takes effect only when the written request is filed with and accepted by the insurer, which is why the owner's instruction must be documented before it becomes binding.
Why the other options are wrong
- B) The insured has rights under the policy only when he or she is also the named policyowner. Merely being the person whose life is insured does not confer any ownership authority, so an insured who is not the owner cannot direct a change of beneficiary under the contract.
- C) A revocable beneficiary holds only an expectancy, not a vested right, so that person cannot veto, approve, or initiate a change of beneficiary. The power to change resides exclusively with the policyowner until the designation is expressly made irrevocable, at which point consent rules change.
- D) The insurer acts as administrator of the contract and must carry out the policyowner's written change-of-beneficiary request. It exercises no independent judgment about who should receive the proceeds and cannot initiate a change on its own.
Memory hook
Owner controls the policy, the beneficiary, and the money. Insured = just the life being insured.