Life insurance policyholders are usually free to designate revocable beneficiaries and change beneficiaries anytime during the policy term, but there are some instances where a policyholder must designate an irrevocable beneficiary, which cannot be changed easily.

Find out the differences between revocable and irrevocable beneficiaries, when and why each type of beneficiary is appropriate, what happens if an irrevocable beneficiary dies before the policyholder.

If you are an irrevocable beneficiary but the beneficiary designation changed, or you are a beneficiary and someone claiming to be an irrevocable beneficiary is disputing the beneficiary designation, call the life insurance lawyers at Boonswang Law for help appealing your life insurance claim denial. Beneficiary disputes are notoriously difficult to win. We can help you, and your initial case consultation is free of charge!

Differences Between a Revocable & Irrevocable Beneficiary

Revocable Beneficiary of Life Insurance

When the beneficiary designation is revocable, the policyholder may change the beneficiary designation at any time without the former beneficiary’s consent or even knowledge. They may even change the life insurance beneficiary just before they die. This is by far the most common type of beneficiary.

Why You Would Designate a Revocable Beneficiary

Generally, policyholders are free to change their beneficiary designations any time during the policy term. This freedom is necessary to account for changes in relationships or if a beneficiary dies and the policyholder must select someone else.

Irrevocable Beneficiary of Life Insurance

An irrevocable beneficiary designation is one that cannot be changed by the policyholder without the beneficiary’s consent. 

If the policyholder seeks to make changes to the policy, such as adding beneficiaries or changing the percentage of the death benefit each beneficiary receives, the life insurance company must inform the irrevocable beneficiary. If the policy gets cancelled by the policyholder or for nonpayment of premiums, the life insurance company must inform the irrevocable beneficiary.

Why You Would Designate an Irrevocable Beneficiary

Policyholders creating life insurance trusts for their minor children often designate that trust as the irrevocable beneficiary of their life insurance policy, to ensure that their children receive a payout when the policyholder dies. 

Some policyholders are child support or spousal support obligors and are ordered by the court to designate their support obligees as irrevocable beneficiaries, to ensure that the obligees receive the income they need should support payments cease because the policyholder died. In these cases, often the divorce decree overrides the named beneficiary. A will does not supersede a beneficiary designation.

Is an Irrevocable Beneficiary the Primary Beneficiary?

Yes. The irrevocable beneficiary is always the primary beneficiary, meaning that the irrevocable beneficiary receives the entire death benefit first. The policyholder may name secondary or contingent beneficiaries, but these beneficiaries only receive a payout if the irrevocable beneficiary predeceases the policyholder.

Removing an Irrevocable Beneficiary

If the policyholder seeks to remove an irrevocable beneficiary, they must obtain the written consent of the irrevocable beneficiary. Usually beneficiary designation forms give the option for an irrevocable beneficiary to sign and give their consent to a change.

Which Type of Beneficiary is Right for You?

Usually, policyholders opt to designate revocable beneficiaries to have the freedom to redesignate beneficiaries as life and relationships change. However, if you have minor children or are a support obligor, you may want to or be forced to name irrevocable beneficiaries.

What Happens if an Irrevocable Beneficiary Dies Before a Policyholder?

If an irrevocable beneficiary predeceases the policyholder, and there are no other irrevocable beneficiaries, the policyholder is free to designate a beneficiary of their choice. In the alternative, the payout goes to any secondary or contingent beneficiaries the policyholder names. If there are no life insurance beneficiaries, the death benefit pays to the policyholder’s estate.

How a Life Insurance Lawyer Helps

If you are the beneficiary of a life insurance policy and someone claims to be the irrevocable beneficiary, or if you are the irrevocable beneficiary and someone else was named, call us. We have helped beneficiary clients across the nation get the payout their loved one intended. Let us help you too. Call us today to discuss your case – free of charge!