What is the difference between revocable and irrevocable beneficiaries?

The distinction between revocable and irrevocable beneficiaries lies primarily in the policyholder's control over the beneficiary designation. A revocable beneficiary can be changed by the policyholder at any time without the need for consent from the beneficiary. This flexibility allows the policyholder to adapt their life insurance policy to reflect changes in their personal or financial circumstances, such as marriage or divorce, without any formalities.

On the other hand, an irrevocable beneficiary cannot be changed or removed by the policyholder without the consent of the named beneficiary. This creates a level of security for the irrevocable beneficiary, as they have a guaranteed interest in the policy proceeds. The irrevocability adds a layer of commitment from the policyholder and is often used in situations where a spouse or child is designated, providing them with assured benefits.

Understanding this difference is critical for anyone navigating life insurance policies, as it can significantly affect how beneficiaries receive benefits and how easy it is to update the policy based on life events. The other options do not accurately capture the fundamental characteristics that define revocable and irrevocable beneficiaries.