Who is an irrevocable beneficiary?

For more information, please see our An irrevocable beneficiary is a person who is guaranteed to receive a death benefit from your life insurance policy unless they consent to forfeit their rights. Children are commonly made irrevocable beneficiaries, but you can choose anyone as your irrevocable beneficiary.

What rights does an irrevocable beneficiary have?

Irrevocable beneficiaries can also offer potential tax benefits. In some cases, the designation of an irrevocable beneficiary can remove the value of the policy from the policyholder's taxable estate, thereby reducing potential estate taxes. Another significant advantage of an irrevocable beneficiary is that it offers protection from creditors.

What is the point of irrevocable beneficiary status?

The point of irrevocable beneficiary status is its permanency. Generally speaking, an irrevocable beneficiary can only be removed if the beneficiary agrees to be displaced, voluntarily surrendering their status. An irrevocable beneficiary has guaranteed rights to assets in an insurance policy or a segregated fund.