Question 92

Joe must have Jane's permission to borrow the loan value of the policy.

In the case where Jane is named as an irrevocable beneficiary of Joe's life insurance policy, Joe is required to obtain Jane's permission before borrowing against the loan value of the policy.

A) Joe does not need Jane's permission to borrow the loan value of the policy.

This statement is incorrect because naming Jane as an irrevocable beneficiary grants her certain rights over the policy, including the need for her consent for Joe to borrow against its value.

B) Joe may remove Jane as beneficiary.

This option is also incorrect; once Jane is named as an irrevocable beneficiary, Joe cannot remove her without her explicit consent. The irrevocable designation protects Jane's interest in the policy.

C) Jane can borrow the loan value of the policy without Joe's permission.

This statement is misleading. While Jane has rights as an irrevocable beneficiary, she cannot independently borrow against the policy without Joe's involvement, as he is the policyholder.

D) Joe must have Jane's permission to borrow the loan value of the policy.

This is the correct answer. Joe's designation of Jane as an irrevocable beneficiary means he cannot make changes, such as borrowing against the policy, without obtaining her consent.

Conclusion

The requirement for Joe to obtain Jane's permission to borrow the loan value of the policy stems from her status as an irrevocable beneficiary, which ensures her rights are protected. Options A, B, and C fail to recognize the implications of irrevocable beneficiary status, making D the only accurate and defensible choice.