What Does Irrevocable Beneficiary Mean?
The term refers to the policy holder of certain insurance or a particular separated fund contract. Being an irrevocable beneficiary, his or her compensation cannot be unaltered without his or her initial agreement. The policy which has among its components such an irrevocable beneficiary ensures that the compensation will be given to the right person.
On the other hand, a revocable beneficiary is a person who can be changed by the owner of the policy at any time during the life of the contact, without any obligation of informing the actual beneficiary of the alteration.
Irrevocable Beneficiary Explained
In order for one to understand the concept, he or she may think of parents who intend to leave a sum of money to their child. Therefore they can have the option of specifying that their child is an irrevocable beneficiary, which means that only he or she can receive the sum of money indicated in the life insurance or other particular type of contract.
There is a common practice according to which a policy owner names a secondary (the so-called contingent) beneficiary just in case the primary beneficiary dies before or at the same time as the owner.