California Life-Only & Accident and Health AgentLife InsuranceHard
A life insurance policyowner wants to change the beneficiary designation from their ex-spouse to their current spouse. The policy contains an 'irrevocable beneficiary' designation for the ex-spouse. Which of the following is true regarding this situation?
- AThe policyowner can change the beneficiary unilaterally with written notice to the insurer.
- BThe policyowner must wait for the ex-spouse to die before changing the beneficiary.
- CThe change can only be made if the ex-spouse provides written consent.
- DThe insurer will automatically change the beneficiary upon notification of divorce.
Show answer & explanationAnswer & explanation
Correct answer: C. The change can only be made if the ex-spouse provides written consent.
An irrevocable beneficiary has a vested interest in the policy proceeds. The policyowner cannot change the beneficiary, assign the policy, or make policy loans without the irrevocable beneficiary's written consent.
Why the other options are wrong
- A. This is true for a revocable beneficiary, but not for an irrevocable one.
- B. While the death of the irrevocable beneficiary would allow a change, it's not the only way; consent is also an option.
- D. Insurers do not automatically change beneficiaries based on divorce; a specific request and, in this case, consent, are required.
Irrevocable Beneficiary
A beneficiary designation that cannot be changed by the policyowner without the written consent of the named beneficiary. The irrevocable beneficiary has a vested interest in the policy.
- Policyowner cannot change beneficiary without consent.
- Policyowner cannot borrow against, assign, or surrender the policy without consent.
- Beneficiary has a vested interest in the policy.
- Provides greater security for the beneficiary.
Memory trick: Irrevocable: The beneficiary's lock on the policy is unbreakable without their key (consent).