Revocable Beneficiary: Definition, Owner Rights & LLQP Traps
A revocable beneficiary is a beneficiary designation the policyowner can change at any time, for any reason, without the beneficiary's knowledge or consent.
Why it matters on the LLQP exam
The first thing to know: revocable is the default. Under provincial insurance law, a beneficiary designation is presumed revocable unless it expressly states it is irrevocable. If an exam question never uses the word "irrevocable," treat the designation as revocable.
With a revocable designation:
- The owner keeps every policy right — surrendering the policy, assigning it, borrowing against the cash value, and changing the beneficiary.
- The beneficiary holds only an expectancy, not a vested interest. They have no say while the insured is alive and gain rights only if the insured dies with the designation still in place.
- Changes are made by filing a new written designation with the insurer (or, in some cases, by will). No notice to the existing beneficiary is required.
The exam's favourite trick is asking whether the current beneficiary must be notified or must consent — the answer is always no for a revocable designation. The second trick is assuming a divorce automatically revokes the ex-spouse; it does not. The designation stands until the owner actually files a change.
Example question
Dev owns a whole life policy naming his brother as (revocable) beneficiary. Without telling anyone, Dev surrenders the policy for its cash value. His brother objects, claiming a right to the money. Who is correct?
- The brother, because he was the named beneficiary
- The brother, because surrender requires beneficiary consent
- Dev, because a revocable beneficiary has no rights while the insured is alive
- Neither — the insurer must hold the funds for both
Answer: C — a revocable beneficiary has a mere expectancy; the owner retains all policy rights without consent or notice.
See the mirror-image rules for an irrevocable beneficiary and the wider contract framework in the life insurance and taxation hub.