A policyowner’s right to change beneficiaries is limited when the beneficiary is designated as:

Rationale

Irrevocable

When a beneficiary is designated as irrevocable, the policyowner cannot change the beneficiary without the consent of that beneficiary, thus limiting their rights. This designation is critical in insurance and estate planning, as it ensures that the intended beneficiary will receive the benefits without interference.

A (Irrevocable) CORRECT

An irrevocable beneficiary designation means that the policyowner cannot change the beneficiary or access the cash value of the policy without the irrevocable beneficiary's consent. This imposes a significant limitation on the policyowner's rights, as the beneficiary has a vested interest in the policy.

B (Contingent) YOUR ANSWER

A contingent beneficiary is one who is entitled to benefits only if the primary beneficiary is deceased or otherwise unable to claim the benefits. This designation does not limit the policyowner's rights; instead, it provides an alternative option without restricting changes to the primary beneficiary.

C (Primary) YOUR ANSWER

The primary beneficiary is the first in line to receive benefits from the policy. The policyowner retains the right to change the primary beneficiary at any time, meaning this designation does not impose any limitations on the policyowner's rights.

D (Revocable) YOUR ANSWER

A revocable beneficiary can be changed by the policyowner at any time without needing consent from the beneficiary. This designation is the opposite of irrevocable, as it allows the policyowner full control over beneficiary changes.

Conclusion

The designation of an irrevocable beneficiary is unique in that it restricts the policyowner's ability to make changes without consent, ensuring that the beneficiary's rights are protected. In contrast, contingent, primary, and revocable designations afford the policyowner greater flexibility and control over their policy and its benefits. Understanding these distinctions is essential for effective estate planning and management of insurance policies.

A policyowner’s right to change beneficiaries is limited when the beneficiary is designated as:

Irrevocable

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