What should Ivan counsel his client to do?

Surjit and Rajbir get married in 2010 and Surjit names Rajbir as the irrevocable beneficiary of his life insurance contract. In 2017, the couple divorces amiably and Surjit meets with his insurance representative, Ivan, to review his plans. Surjit tells Ivan that he would like to keep Rajbir as his beneficiary.

What should Ivan counsel his client to do?
A . Surjit does not need to do anything as Rajbir is already the named beneficiary.
B . Surjit cannot make any changes to the policy without Rajbir’s consent as she is the irrevocable beneficiary of his policy.
C . Surjit should name a different beneficiary now that he is divorced.
D . Surjit should once again designate Rajbir as the beneficiary.

View Answer

Answer: B

Explanation:

When a beneficiary is designated as irrevocable, the policyholder cannot make changes to the beneficiary designation or make other policy modifications that impact the irrevocable beneficiary’s rights without their consent. According to LLQP standards, an irrevocable beneficiary has a vested interest in the policy, and any alterations require their permission.

In this case, Surjit would need Rajbir’s consent to change or remove her as the beneficiary, regardless of their divorce. This stipulation upholds the binding nature of an irrevocable designation, ensuring that changes can only be made with the beneficiary’s agreement to protect their rights in the policy.