What Is The Meaning Of Irrevocable In Life Insurance?
When you purchase a life insurance policy, you choose a beneficiary or beneficiaries who will receive the death benefit related to the policy after you pass away. There are two main types of beneficiaries – an irrevocable beneficiary and a revocable beneficiary. Here’s what you need to know about irrevocable beneficiaries.
|Irrevocable Beneficiary||Someone who has full rights to the funds from your life insurance policy. Even if you want to change the beneficiary on your policy, an irrevocable beneficiary will still be able to receive the death benefit because of the terms of the contract. The only way to remove an irrevocable beneficiary from your policy is for them to agree to forfeit their rights to the money.|
|Revocable Beneficiary||Someone whose rights to your life insurance benefits can be revoked or changed while you’re still alive, should you choose to do so. You can remove them from your policy at any time, for any reason, and they do not need to approve this change. They also have no access to your policy and cannot make any changes.|
If you name an irrevocable beneficiary on your life insurance policy, they will have full rights to the funds from your policy, even if you want to change the beneficiary later. The only way to remove an irrevocable beneficiary is for them to agree to forfeit their rights to the money. This can be a difficult situation, especially if the irrevocable beneficiary is a child or a former spouse.
While irrevocable beneficiaries offer peace of mind, they are not for everyone. Revocable beneficiaries are more common because they offer more flexibility to make changes if the need arises. It’s typically simple to make a change to a policy that has a revocable beneficiary. If the beneficiaries are irrevocable, however, it becomes significantly complicated, or in some cases impossible.
It’s important to review your life insurance policy annually to make sure it’s meeting your needs and that the beneficiaries and other information are correct. It may also be wise to take a look at your life insurance policy when you experience any major life changes, such as getting married or divorced. In those cases, you may wish to change a beneficiary on your life insurance policy.
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