West Virginia State Life Insurance Practice Exam

Which type of beneficiary designation allows the policy owner to retain the right to change beneficiaries?

1. Revocable

2. Irrevocable

3. Contingent

4. Primary

The correct answer is: Revocable

The concept of a revocable beneficiary designation is central to this question. When a policy owner designates a beneficiary as revocable, it means that they can change the beneficiary at any time without needing the consent of the current beneficiary. This flexibility allows the policy owner to adapt to changing circumstances in their life, such as marriage, divorce, or shifts in financial planning. In contrast, an irrevocable beneficiary designation transfers rights to the beneficiary, meaning that the policy owner cannot change the beneficiary without their consent. This is often used when a policy owner wants to provide a level of security to the beneficiary, ensuring that they cannot be removed easily. Contingent beneficiaries are secondary beneficiaries who would receive the death benefit only if the primary beneficiary is unable to do so, but this designation does not directly relate to the policy owner's ability to change beneficiaries. Primary beneficiaries are the first in line to receive benefits, but this classification does not indicate whether their designation is revocable or irrevocable. Thus, the revocable designation enables policy owners to maintain control over the beneficiary designation, allowing for changes to be made as needed.