What Is The Difference Between A Revocable And Irrevocable Beneficiary?
With your life insurance policy, it is standard to designate a beneficiary. Before we get too much into the nuances of beneficiaries, lets simply define what a beneficiary is. By definition, a beneficiary is someone who gains an advantage from something, especially a trust, will or life insurance policy. While we don’t necessarily agree with the term advantage (we hope that you won’t feel at an advantage after your loved one has passed) for the sake of this article we will work with that definition.
What Is A Revocable Beneficiary?
Simply put, if you’ve named a revocable beneficiary on your life insurance policy, you can remove or make changes to your beneficiary designation at any time without their permission.
What Is An Irrevocable Beneficiary?
Being the opposite of a revocable beneficiary, you must obtain the signature of an irrevocable beneficiary in order to appoint a new recipient. It’s important to note that if you designate your irrevocable beneficiary as someone who is under the age of 18, you must wait until they are of legal age to obtain the signature.
Commonly, an irrevocable beneficiary is assigned via legal agreements such as a marital breakdown. This can be for various reasons, including ensuring that minors receive the remuneration in the event that a parent passes away.
Deciding On A Beneficiary
Deciding who to assign as your beneficiary is no easy feat. In the majority of cases it is a spouse or a child, but the beneficiary does not have to have any familial relation to you. Depending on your situation and reason for purchasing a life insurance policy, the beneficiary might also be your business partner, the business itself or something along those lines. With that being said, we recommend that you take the time to consider your options and choose wisely.