What is Irrevocable Beneficiary?

An irrevocable beneficiary is a person or entity that has been designated as the recipient of the benefits of an insurance policy, and whose designation cannot be changed without their consent.

In the insurance industry, a beneficiary is a person or entity that is entitled to receive the benefits of an insurance policy in the event of a covered loss or the policyholder’s death. The policyholder is the person who owns the policy and has the right to change the beneficiary designation at any time during the policy term.

An irrevocable beneficiary is a type of beneficiary designation that is typically used in situations where the policyholder wants to ensure that the benefits of the policy will be received by a specific person or entity, regardless of any changes that the policyholder may make to the policy. This can be useful in cases where the policyholder wants to ensure that the benefits will be received by a spouse, child, or other loved one, or to ensure that the policy benefits will be used for a specific purpose.

There are several types of insurance policies that may allow for the designation of an irrevocable beneficiary, including life insurance policies, annuities, and certain types of trusts.

In a life insurance policy, the irrevocable beneficiary is typically the person or entity that will receive the policy’s death benefit in the event of the policyholder’s death. The policyholder may designate an irrevocable beneficiary in order to ensure that the death benefit will be received by a specific person or entity, regardless of any changes that the policyholder may make to the policy.

In an annuity, the irrevocable beneficiary is typically the person or entity that will receive the annuity payments in the event of the policyholder’s death. The policyholder may designate an irrevocable beneficiary in order to ensure that the annuity payments will be received by a specific person or entity, regardless of any changes that the policyholder may make to the policy.

In a trust, the irrevocable beneficiary is typically the person or entity that will receive the trust assets in accordance with the terms of the trust agreement. The trust may be set up as an irrevocable trust, which means that the terms of the trust cannot be changed without the consent of the irrevocable beneficiaries.

It is important to note that, while an irrevocable beneficiary cannot be changed without their consent, the policyholder may still be able to change the distribution of the policy benefits. For example, in a life insurance policy, the policyholder may be able to change the distribution of the death benefit among multiple beneficiaries.

In summary, an irrevocable beneficiary is a person or entity that has been designated as the recipient of the benefits of an insurance policy, and whose designation cannot be changed without their consent. This type of beneficiary designation is often used in life insurance policies, annuities, and certain types of trusts to ensure that the policy benefits will be received by a specific person or entity, regardless of any changes made to the policy.