Question 92

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

In this situation, because Jane is named as the irrevocable beneficiary of Joe's life insurance policy, he must obtain her permission to borrow against the loan value of the policy.

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

This option is incorrect because having an irrevocable beneficiary means that Joe cannot make changes to the policy, including borrowing against its value, without Jane's consent. Her irrevocable status grants her rights that restrict Joe's actions regarding the policy.

B) Joe may remove Jane as beneficiary.

This option is also incorrect. Since Jane is named as an irrevocable beneficiary, Joe cannot remove her without her consent. An irrevocable designation protects the beneficiary's rights, preventing the owner from making unilateral changes.

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

This statement is incorrect because, although Jane is the irrevocable beneficiary, she does not have the authority to borrow against the policy without Joe’s involvement. The policy owner retains the borrowing rights, even when a beneficiary is irrevocable.

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

This option is correct. As the irrevocable beneficiary, Jane holds rights that require Joe to seek her approval before he can take out a loan against the policy’s value, ensuring her financial interests are protected.

Conclusion

The correct answer is D because it aligns with the principles governing irrevocable beneficiaries in insurance policies, which require the policyholder to obtain permission from the beneficiary for certain actions. Options A, B, and C fail to recognize the legal implications of Jane's irrevocable status, which restricts Joe's ability to act independently regarding the policy.