Question 70

The policyowner’s right to change beneficiaries is limited when the beneficiary is designated as irrevocable.

When a beneficiary is designated as irrevocable, the policyowner cannot change the beneficiary without the consent of that beneficiary. This ensures that the designated beneficiary's rights are protected.

A) Irrevocable

This option is correct because an irrevocable beneficiary designation means that the policyowner cannot change the beneficiary or take any actions that would affect the beneficiary's rights without obtaining explicit permission from the irrevocable beneficiary.

B) Contingent

A contingent beneficiary is one who is entitled to the policy proceeds only if the primary beneficiary is deceased or otherwise unable to claim the benefits. This designation does not limit the policyowner's right to change the primary beneficiary, making this option incorrect.

C) Primary

A primary beneficiary is the first in line to receive benefits from the policy. The designation of a primary beneficiary does not limit the policyowner's ability to change this designation, thus rendering this option incorrect.

D) Revocable

A revocable beneficiary can be changed at any time by the policyowner without the need for consent from the beneficiary. Therefore, this option is incorrect as it does not impose any limitations on the policyowner's rights.

Conclusion

The designation of a beneficiary as irrevocable is crucial as it restricts the policyowner's ability to make changes without consent, ensuring the beneficiary's rights are upheld. In contrast, contingent, primary, and revocable designations allow for changes by the policyowner, making them less restrictive. Thus, option A is definitively the correct answer.