How do a revocable and an irrevocable beneficiary differ?

The distinction between revocable and irrevocable beneficiaries lies primarily in the policyholder's rights regarding modifications to the beneficiary designation. A revocable beneficiary can be changed by the policyholder at any time and without requiring the consent of the beneficiary. This means the policyholder holds the flexibility to alter who will receive the death benefit, enabling them to respond to changing life circumstances, such as marriage, divorce, or changes in relationships.

In contrast, an irrevocable beneficiary designation establishes a more permanent arrangement. Once a beneficiary is designated as irrevocable, the policyholder cannot change this designation or remove the beneficiary without their consent. This adds a layer of security for the irrevocable beneficiary, as their right to the insurance proceeds becomes more guaranteed.

The correct understanding of revocable beneficiaries allows policyholders to retain control and flexibility over their life insurance policies, making it beneficial in circumstances where circumstances or relationships are fluid.