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What is an irrevocable beneficiary?

A couple going over tax documents with a professional.

Key takeaways

  • An irrevocable beneficiary is a person who is guaranteed to receive a death benefit from your life insurance policy unless they consent to forfeit their rights.
  • Children are commonly made irrevocable beneficiaries, but you can choose anyone as your irrevocable beneficiary.
  • Alternatively, you can choose someone to be a revocable beneficiary, which allows you to change the death benefit or remove them from the policy without requiring you to notify them of changes.

A life insurance policy provides a payout known as a death benefit to your loved ones if you die, ensuring they have financial support left to them. The recipient of a death benefit is known as the beneficiary, and you can choose to make them an irrevocable beneficiary, which secures their access to the death benefit no matter what unless they consent to being removed.

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In contrast, a revocable beneficiary can be removed from the policy at any time without their approval. It’s important to understand the implications of both these options so you can choose how much control you have over the death benefit and how you want your policy to work.

Understanding an irrevocable beneficiary

When you die, the death benefit from your life insurance will go to those you have named as beneficiaries in your insurance policy.

There are two main types of beneficiaries: irrevocable and revocable. In some cases, a person is an irrevocable beneficiary, meaning they have full rights to the funds from your life insurance policy unless they consent to being removed. Even if you want to change the beneficiary on your policy, you will not be able to make this change on your own and an irrevocable beneficiary will still be able to receive the death benefit due to the terms of the contract.

The only way to remove an irrevocable beneficiary from your policy is for them to agree to forfeit their rights to the money. This can often be a difficult situation, especially because removing an irrevocable beneficiary from your policy often involves lawyers. It is not as simple as contacting your insurance company to have a new beneficiary added to your policy statement.

Children are often named as irrevocable beneficiaries on their parent’s life insurance policy because it ensures they have access to the money. But it gets tricky when marriage is involved. For example, if you name your spouse as an irrevocable beneficiary, but you get divorced years later, they legally still have rights to the money unless they agree to be removed.

Revocable beneficiaries

When comparing a revocable beneficiary vs. irrevocable beneficiary, the scenario is completely the opposite. A revocable beneficiary is someone whose rights to your life insurance benefits can be revoked or changed while you’re still alive, should you choose to do so. You can remove them from your policy at any time, for any reason, and they do not need to approve this change. They also have no access to your policy and cannot make any changes.

With a revocable beneficiary, the policyholder can also make changes to the portion of the death benefit that they will receive, either increasing or decreasing the amount of death benefit they will receive. There is no requirement to notify them if you cancel the policy.

Revocable beneficiaries are more common than irrevocable beneficiaries simply because your choices of beneficiary may change depending on time and shifts in circumstances. In turn, it makes sense to have the flexibility to make changes if the need arises. It’s typically simple to make a change to a policy that has a revocable beneficiary. If the beneficiaries are irrevocable, however, it becomes significantly complicated, or in some cases impossible.

Why would I want an irrevocable beneficiary?

People who name an irrevocable beneficiary on their life insurance policy often do so for peace of mind. For example, if you have a demanding job and your spouse primarily stays home with your kids, you might name him or her as an irrevocable beneficiary to ensure they have access to your life insurance funds in order to care for your family if you were to die unexpectedly.

As mentioned, many people choose to add their children as irrevocable beneficiaries to their life insurance policy. This ensures that the children will have access to the money, regardless of what happens over the course of your lifetime. For instance, if you get divorced and remarry later in life, naming your children as irrevocable beneficiaries means that your new spouse cannot attempt to claim the money or make changes to your policy after you die.

Pros and cons of an irrevocable beneficiary

Naming someone an irrevocable beneficiary on your life insurance policy has benefits for both you and the recipient, but there are potential downsides to be aware of as well before giving a loved one this designation.

Pros Cons
Ensures money goes to who it is intended for Cannot be changed without consent of beneficiary, which may cause issues if you want to make a private change
Can benefit children in the case of divorce or remarriage No control over the trust in case of emergency

Frequently asked questions

    • It’s a good idea to review your life insurance policy annually to make sure it’s meeting your needs and that the beneficiaries and other information are correct. It may also be wise to take a look at your life insurance policy when you experience any major life changes, such as getting married or divorced. In those cases, you may wish to change a beneficiary on your life insurance policy. For example, you might want to add your newborn child as a beneficiary of your policy. Doing so should not affect your life insurance premiums.
    • If you get divorced and your ex-spouse is an irrevocable beneficiary, you might be in a tough spot. You can get them removed from your policy, but only if they agree to forfeit their right to the money. If they do not agree to be removed, they will still legally have access to your death benefit.
    • The best life insurance company is different for everyone. It depends on the type of policy you need, how much coverage you need, your age, your overall health condition and your budget. However, some of the major providers that stand out for offering great customer service, financial stability and robust coverage options are Prudential Financial, Nationwide and MassMutual.
    • A primary beneficiary means that this person will be paid first when the death benefit of the life insurance policy is paid out, but this is a status that can be changed by the policyholder at any time. An irrevocable beneficiary is a person who cannot be removed from receiving the death benefit without their consent, meaning they have the ability to reject a policy change that may affect their status.

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