Tennessee Insurance Practice Exam

In life insurance, what characteristic allows a policyowner to retain the right to make changes to the beneficiary?

1. Contingent designation

2. Irrevocable designation

3. Revocable designation

4. Permanent designation

The correct answer is: Revocable designation

The characteristic that allows a policyowner to retain the right to make changes to the beneficiary is known as a revocable designation. When a policyowner designates a beneficiary as revocable, they maintain the ability to alter, change, or remove that beneficiary at any time without needing consent from the beneficiary. This flexibility is important for policyowners who may wish to update their beneficiary designations due to changes in personal circumstances, such as marriage, divorce, or changes in relationships. In contrast, an irrevocable designation prevents the policyowner from changing the beneficiary without the beneficiary's consent. This means that once an irrevocable beneficiary is named, the policyowner relinquishes the right to make future changes, which can limit their flexibility. Contingent designation refers to a secondary beneficiary who would receive policy benefits only if the primary beneficiary is unavailable at the time of the insured's death, but it does not relate to the ability to change the primary beneficiary. Permanent designation typically does not refer to a specific type of beneficiary designation in insurance, and it does not provide context regarding the ability to change the beneficiary status. Thus, revocable designation is the correct choice as it clearly allows for future modifications by the policyowner.