insurance

Irrevocable Beneficiary

A beneficiary designation on a life insurance policy that cannot be changed or removed without the beneficiary's written consent. Once named, this beneficiary has permanent rights to the policy proceeds and must approve any policy changes.

Example

“Tom named his daughter as an irrevocable beneficiary on his life insurance policy during their divorce proceedings to guarantee her inheritance rights.”

Memory Tip

Remember 'IRREVOCABLE = IMMOVABLE' - once set, this beneficiary cannot be moved or changed without their permission.

Why It Matters

This designation provides absolute security for beneficiaries, ensuring they cannot be removed from a policy later. It's commonly used in divorce settlements or estate planning to guarantee financial protection for children or dependents.

Common Misconception

People often think they can still change an irrevocable beneficiary if circumstances change significantly, like remarriage or family disputes. However, the beneficiary must consent to any changes regardless of the situation, which can create complications if relationships deteriorate.

In Practice

During their divorce, Mike agrees to name his ex-wife Lisa as irrevocable beneficiary on his $200,000 life insurance policy to secure alimony payments. Five years later, Mike remarries and wants to change the beneficiary to his new wife, but he cannot do so without Lisa's written permission. Even if Mike stops paying premiums and lets the policy lapse, Lisa has the right to continue premium payments to keep the policy active.

Etymology

From Latin 'in-' meaning 'not' and 'revocare' meaning 'to call back,' combined with 'beneficiary' from Latin 'beneficium' meaning 'kindness' or 'benefit.'

Common Misspellings

irrevokable beneficiaryirrevocible beneficiaryirrevocable beneficaryirreversible beneficiary

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