A revocable beneficiary's interest in the death proceeds is best described as:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Because the owner may change a revocable beneficiary at any time, the beneficiary holds only an expectancy, not a vested right. The right to the proceeds becomes vested only when the insured dies while the designation is still in force. Until that moment, the beneficiary cannot assign the proceeds, prevent a change, or claim the cash value. This is the fundamental difference from an irrevocable beneficiary, who holds a vested interest from the date of designation and whose consent is required for any change. The revocable designation is the default and preserves the owner's flexibility.
Why the other options are wrong
- B) A revocable designation creates no immediate vested right. Only an irrevocable designation gives the beneficiary a vested interest from the start.
- C) The beneficiary has no claim to the cash value. Cash value belongs to the policyowner during the insured's lifetime.
- D) The beneficiary holds no contractual rights equal to the owner's while the policy is in force. The owner alone controls the contract.
Memory hook
Revocable equals expectancy today, vested only at the insured's final breath.