Life Insurance: Revocable vs. Irrevocable Beneficiary Designations
Irrevocable beneficiary policies
must be signed off upon
if any changes are made.
Photo by Christian Birmele
Life insurance policies can have either a revocable or irrevocable beneficiary designation.
A revocable beneficiary can be changed by the owner of the policy without the signature of the beneficiary. Most life insurance policies in Canada have Revocable beneficiary designations.
An irrevocable beneficiary requires the beneficiary to sign off on any policy changes. Therefore, should the policy owner wish to change the beneficiary on a policy where an irrevocable beneficiary exists, both the policy owner and the irrevocable beneficiary must sign off on it.
Irrevocable beneficiary designations are often given as part of a separation agreement or a divorce settlement. Because irrevocable beneficiaries have extraordinary powers, it is crucial that the policy owner be made aware of these powers should such a designation be made.
The type of policy does not impact a beneficiary designation. Term or Permanent policies can have the beneficiary as Revocable or Irrevocable or vice versa. Life Insurance beneficiaries can be 1 person or multiple persons.
One important point for multiple beneficiaries on no electronic applications make sure the hand writing is legible. Many applications only leave space for two or three names as beneficiaries so the broker might try and squeeze in this information. If the hand writing is not legible this could create some complications at the time of claim.
There is no cost to changing your
beneficiary designation and you can change it more than once. Most insurance companies have a form for the applicant to complete. This form can be obtained by your insurance advisor or by contacting the insurance company directly. In the event a form is not available you can send a signed letter specifying the beneficiary changes you would like. Make sure you receive confirmation from the insurance confirmation from the insurance company that the change has been made and keep this documentation with the policy.
For older policies its a good idea to contact the insurance company to make sure you have the correct beneficiary, the beneficiary designation listed in the policy document could have been changed and the supporting documentation may not have been attached to the policy.
If the beneficary is a minor the insured should name a trustee. This person will look after the funds until the beneficary reaches age 18. Another good tip is to make sure your beneficiary or trustee know about all your life insurance policies give them a summary of the policy numbers with insurance company / broker contact details so they know who to contact just in case they can not find the policy.
For more details on beneficiary designations in Canada, please contact us at 1-866-899-4849 or contact us by e-mail at
Posted by Chantal Marr.
Chantal Marr is a member of the Independent Financial Brokers of Canada.
Much of her success stems from her ability to listen to her clients' needs.