New Jersey Life Producer Practice Exam

What term indicates that a policy beneficiary cannot be changed?

1. Revocable beneficiary

2. Irrevocable beneficiary

3. Contingent beneficiary

4. Primary beneficiary

The correct answer is: Irrevocable beneficiary

The term that indicates a policy beneficiary cannot be changed is "irrevocable beneficiary." When a policy owner designates an irrevocable beneficiary, this means that the beneficiary's rights to the policy benefits are secured, and the owner cannot change or remove this beneficiary without their consent. This provision provides the beneficiary with certain protections, ensuring they will receive the proceeds of the policy upon the insured's death, provided they are still living and within the stipulated conditions of the policy. In contrast, a revocable beneficiary allows the policyholder to change the beneficiary at any time without needing consent from the beneficiary. A contingent beneficiary is someone who will receive the policy benefits only if the primary beneficiary is deceased or otherwise unable to collect the funds. Meanwhile, a primary beneficiary is the first in line to receive the benefits, but unlike an irrevocable beneficiary, their designation can be changed by the policy owner.