54. Which of the following beneficiary designations may limit a policyowner's rights?
Answer: D
Irrevocable beneficiary designations may limit a policyowner's rights.
An irrevocable beneficiary designation cannot be changed without the consent of the beneficiary, thereby limiting the policyowner's rights over the policy.
A) Primary
A primary beneficiary designation allows the policyowner to name the first individual or entity that will receive the death benefit upon the insured's death. This designation does not limit the policyowner's rights, as they can change the primary beneficiary at any time if the designation is revocable.
B) Contingent
A contingent beneficiary is the next in line to receive the death benefit if the primary beneficiary is unable to do so. This designation also does not limit the policyowner's rights, as they can modify it according to their wishes, provided it is revocable.
C) Revocable
A revocable beneficiary designation allows the policyowner to change the beneficiary at any time without the beneficiary's consent. Therefore, it does not impose any restrictions on the policyowner's rights regarding the policy.
D) Irrevocable
An irrevocable beneficiary designation significantly limits a policyowner's rights because it requires the consent of the beneficiary for any changes to be made. This means that the policyowner cannot alter or remove the irrevocable beneficiary without their agreement, thereby restricting their control over the policy.
Conclusion
The irrevocable beneficiary designation is the only option that restricts the policyowner's rights, as it necessitates obtaining permission from the beneficiary to make any changes. In contrast, primary, contingent, and revocable designations offer the policyowner flexibility and control over their policy decisions. Thus, the correct answer is clearly option D.