Irrevocable Beneficiary

An irrevocable beneficiary effectively controls the insurance contract and must give (written?) consent before you (as the policyowner) can

  • alter or revoke the beneficiary designation
  • assign the policy contract (e.g., for a commercial loan)
  • make withdrawals
  • surrender the policy contract for the surrender value
  • transfer ownership of the policy contract
  • change the coverage amounts
  • take a policy loan (confirm)
  • buyout another shareholder on death disability or retirement under the terms of a shareholder agreement (confirm)

There is much more flexibility with a revocable beneficiary.

If an irrevocable beneficiary is a minor, the policy is frozen until the child reaches the age of majority.

Where Consent is not Needed

You can do the following without the consent or knowledge of the irrevocable beneficiary

  • lapse the policy
  • for whole life, you can
    • receive policy dividends (in cash)
    • change the policy to reduced paidup or extended term
    • pay premiums with an automatic policy loan

The insurer can rescind the policy without the consent or knowledge of the irrevocable beneficiary.

Reasons for an Irrevocable Beneficiary

You may want to make a beneficiary irrevocable

  • to comply with a family court order
  • to comply with a separation agreement
  • for creditor protection when the intended beneficiary is not in the protected class

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