Texas Life Agent Practice Exam

In naming her husband as the beneficiary while retaining ownership rights, what type of beneficiary should Margaret May designate?

1. Irrevocable beneficiary

2. Contingent beneficiary

3. Revocable beneficiary

4. Primary beneficiary

The correct answer is: Revocable beneficiary

In the scenario where Margaret May wishes to name her husband as the beneficiary while retaining ownership rights of the policy, the appropriate designation would be a revocable beneficiary. When a beneficiary is designated as revocable, the policyowner retains the ability to change the beneficiary at any time without the consent of the current beneficiary. This is particularly important for Margaret, as maintaining ownership rights implies that she may want the flexibility to alter her beneficiary arrangement in the future or respond to changing circumstances. Thus, by choosing a revocable beneficiary, she can ensure that she retains control over her policy and its benefits. Other types of beneficiaries, such as an irrevocable beneficiary, would not allow her to make changes without the beneficiary's consent. A contingent beneficiary is someone who receives the death benefit only if the primary beneficiary is unable to do so, which does not align with Margaret's intent to directly name her husband as the primary recipient. Likewise, while a primary beneficiary is an important designation, it does not offer the same flexibility as a revocable beneficiary regarding the rights of the policyowner to change or revoke that designation later.