|
Your beneficiary designation is the person or people who receive the proceeds of the life insurance contract. However, there are two different beneficiary designations. The first is a revocable designation. This means that the insured can change the beneficiary of the life insurance policy. Most people use this type of beneficiary designation.
The second type of beneficiary designation is an irrevocable designation. This means that the insured person gives up the right to change the person or people named as beneficiaries. In effect, this means that the beneficiary is a joint owner of the policy. In order to take out a loan against the policy or assign the policy, the irrevocable beneficiary must also sign.
You will often see this kind of beneficiary designation after a marital divorce where small children are involved. The spouse will want to insure that the family will be protected and the insured spouse doesn't change the beneficiary designation if that spouse decides to re-marry, start a new family, or just tries to use the beneficary clause as some sort of negotiating point.
|
