Texas Life Agent Practice Exam

A beneficiary designation that prevents the policy owner from altering the policy is known as what?

1. Revocable

2. Irrevocable

3. Conditional

4. Nominee

The correct answer is: Irrevocable

The term that describes a beneficiary designation preventing the policy owner from altering the policy is "irrevocable." In this context, when a beneficiary is designated as irrevocable, it means that the policy owner cannot change the beneficiary or the terms of the policy without the consent of the irrevocable beneficiary. This type of designation provides a level of security and assurance to the beneficiary, ensuring that they will receive the specified benefits upon the insured's death, regardless of changes in circumstances or the policy owner's wishes. In contrast, a revocable beneficiary designation allows the policy owner to change the beneficiary at any time without the beneficiary's consent. Conditional and nominee do not accurately reflect the nature of beneficiary designations regarding the ability to alter or maintain control over the policy. Understanding these distinctions is crucial in the context of estate planning and ensuring that policy owners can make informed decisions about how their insurance policies will function in the event of their passing.