Naming A Beneficiary For Your Life Insurance Policy

A revocable appointment of a beneficiary means that you can change your mind and "revoke" the beneficiary and appoint a new beneficiary whenever you like. Generally, you don't have to state that a beneficiary designation is revocable if that is your intent.

Beneficiaries are assumed to be named revocably, unless you specify to the contrary.

If there is a revocable appointment of a beneficiary, the beneficiary does not get any rights or interest in the policy or the proceeds during your lifetime. For practical purposes, that means if you change the identity of beneficiaries from X to Y, X can't do anything about the change.

When you name someone as an "irrevocable" beneficiary, you can't change the identity of the beneficiary. By naming a beneficiary irrevocably, you give the beneficiary certain rights and interests in the policy that you cannot revoke on your own. The only way you can change the identity of the beneficiary is if the irrevocable beneficiary agrees to allow the change. Additionally, you cannot get a loan using the policy as collateral or sell the policy in a Viatical or Senior Settlement without the consent of the irrevocable beneficiary. For more information, see Commercial Loans Against Life Insurance, Friendly Loans Using Life Insurance As Collateral, Viatical Settlements and Senior Settlements.

If you wish to name a beneficiary irrevocably, you must state that the beneficiary is being so named.

Standard advice is not to name a beneficiary irrevocably unless there is a requirement or specific reason to do so, such as part of a divorce decree or loan agreement. Naming an irrevocable beneficiary takes away the flexibility you may need due to ever changing, unanticipated circumstances.

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