Content Overview
- Summary
- You May Name More Than One Person As Beneficiary Of A Life Insurance Policy
- You May Name A "Class" Of Individuals As Beneficiary Of A Life Insurance Policy
- You May Have Primary And Contingent Beneficiaries
- A Beneficiary Of A Life Insurance Policy May Be "Revocable" Or "Irrevocable"
- Different Types Of Beneficiary Designations May Be Combined
- Understand The Consequences If You Want To Name A Minor As Beneficiary
- If You Want To Name A Spouse Your Beneficiary, Be Clear Whether It Is The Relationship That Controls
- You Can Name A Significant Other Or Life Partner As Beneficiary With Discretion If You'd Like
- You Can Name Your Estate As Beneficiary Of A Life Insurance Policy
Naming A Beneficiary For Your Life Insurance Policy
A Beneficiary Of A Life Insurance Policy May Be "Revocable" Or "Irrevocable"
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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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