Connecticut Life Producer Practice exam

What differentiates between revocable and irrevocable beneficiaries?

1. Revocable beneficiaries have no rights; irrevocable beneficiaries do

2. Revocable beneficiaries can be changed without consent; irrevocable cannot

3. Irrevocable beneficiaries are temporary; revocable are permanent

4. Revocable beneficiaries require insurer consent to change; irrevocable do not

The correct answer is: Revocable beneficiaries can be changed without consent; irrevocable cannot

The distinction between revocable and irrevocable beneficiaries primarily hinges on the ability to change the beneficiary designation without the consent of the current beneficiary. Revocable beneficiaries can be altered or replaced by the policy owner at any time and without needing to obtain approval or consent from the beneficiary. This flexibility allows the policy owner to adjust their financial plans as circumstances change. In contrast, irrevocable beneficiaries are those designated in a way that their rights cannot be changed without their consent. Once a beneficiary is designated as irrevocable, the policy owner must seek permission from that beneficiary if they wish to make any changes. This provides the irrevocable beneficiary with certain rights to the policy, such as ensuring that they will receive the death benefit, which may influence financial and legal considerations for both the policyholder and the beneficiary. It's important to understand this difference when making decisions about life insurance policies, as it impacts the control policyholders have over their beneficiaries and the long-term financial planning involved with life insurance.