PSI Life Exam Practice Test

What cannot a policyowner do without written consent if they have named an irrevocable beneficiary?

1. Change the policy amount

2. Change the beneficiary

3. Transfer ownership of the policy

4. Change the premium payment schedule

The correct answer is: Change the beneficiary

When a policyowner designates an irrevocable beneficiary, they lose the flexibility to change that beneficiary without written consent from the irrevocable beneficiary. This is because the designation of an irrevocable beneficiary means that their rights to the policy proceeds are secured, and any alterations that affect their benefits require their approval to protect their interests. In contrast, changing the policy amount, transferring ownership of the policy, or adjusting the premium payment schedule does not always necessitate consent from the beneficiary, especially if the beneficiary is not entitled to income or benefits from those specific changes, or if the policy provisions grant the owner that flexibility. Therefore, the inability to change the beneficiary highlights the binding nature of the irrevocable designation, ensuring that the beneficiary’s rights remain intact and safeguarded from unilateral decisions by the policyowner.