What is the difference between a revocable and an irrevocable beneficiary?

The difference between a revocable and an irrevocable beneficiary lies significantly in the policyholder's control over the beneficiary designation. A revocable beneficiary can be changed by the policyholder at any time, without needing permission or consent from the beneficiary. This flexibility is beneficial if the policyholder's circumstances change, such as a change in marital status or other personal situations.

In contrast, an irrevocable beneficiary cannot be changed by the policyholder without the consent of that beneficiary. This means that once a beneficiary is designated as irrevocable, the policyholder must obtain permission from the beneficiary to make any changes, thereby providing the beneficiary with security and certainty regarding the benefit they will receive.

This concept is vital to understand in the context of life insurance, as it affects the rights of the beneficiaries, the policyholder's ability to alter the policy, and the overall management of the insurance policy. Thus, the correct assertion regarding the nature of these types of beneficiaries clarifies how they operate within the framework of life insurance policies.