A “revocable beneficiary” is a designation in life insurance and living benefits policies where the policyholder retains the right to change the beneficiary without the consent of the beneficiary currently named in the policy. This flexibility allows the policyholder to adjust their policy’s beneficiary designation as their personal circumstances or relationships change over time. In Quebec, naming your married or civil union spouse as beneficiary (in a writing other than a will) is irrevocable unless you state otherwise.
Key aspects of a revocable beneficiary include:
Flexibility
The policyholder can change the beneficiary at any time and for any reason, providing flexibility to adapt to life changes such as marriage, divorce, the birth of children, or changes in personal relationships.
No consent required
Unlike an irrevocable beneficiary, where the beneficiary’s consent is needed to make any changes, a revocable beneficiary can be changed without informing or obtaining permission from the current beneficiary.
Control over policy
The policyholder maintains control over the policy and its benefits, ensuring that they can make decisions that best reflect their current wishes and intentions.
Estate planning
Designating a revocable beneficiary is an important aspect of estate planning, allowing policyholders to ensure that the policy benefits align with their broader estate planning goals and strategies. Life insurance paid to a named beneficiary passes outside the estate and probate (Civil Code art. 2455 in Quebec; the provincial insurance acts elsewhere); proceeds payable to the estate, or with no living beneficiary, go through the estate.
Legal implications
While the policyholder has the freedom to change a revocable beneficiary, it’s important to consider the legal and emotional implications of making such changes, especially if the policy is intended to provide for specific individuals after the policyholder’s death.