Glossary
Irrevocable beneficiary, defined
A named recipient whose position on the policy cannot be changed, and whose consent is needed before the owner can alter the recipients, borrow against the cash value, surrender the policy or assign it. The owner gives up control in exchange for certainty to the other party.
In practice
It appears most often in divorce decrees, where a parent is ordered to keep a policy for the children and the ex-spouse or the children are locked in so the policy cannot be quietly redirected, and in business arrangements where a lender or partner is secured by the policy. The status is a burden on the owner that outlasts the reason for it unless the decree or agreement says when it ends. Before agreeing to it, read which actions need consent; some forms block a loan, others only a change of beneficiary. Getting a signature from an estranged ex-spouse years later can be slow, and a carrier will not act without it.
A worked example
Suppose a divorce decree requires a father to keep a $500,000 term policy with his two children as irrevocable beneficiaries until the youngest turns 21. Suppose he later wants to reduce it to $250,000 to save premium; the carrier requires written consent from the children's guardian, his ex-wife, before it will change the policy. Hypothetical, to show the mechanism.
Applies to: Life InsuranceTerm Life Insurance