An irrevocable beneficiary is a person or entity named on a life insurance policy or annuity contract whose rights cannot be changed or revoked by the policyowner without that beneficiary's consent. Once designated, an irrevocable beneficiary gains a vested interest in the policy benefits, meaning the owner usually cannot change the beneficiary, reduce coverage, surrender the policy, or take certain policy loans without written agreement from the irrevocable party. This designation can provide added security for divorcing spouses, children, lenders, or business partners who rely on the policy as part of a settlement, support obligation, or collateral arrangement. While irrevocable beneficiary status can strengthen the beneficiary's protection, it also significantly limits the policyowner's flexibility in future planning decisions.

In everyday usage, advisors see irrevocable beneficiary designations in divorce decrees, buy sell agreements, child support arrangements, and key person or collateral assignment cases. A court order may require an ex spouse to remain an irrevocable beneficiary on a policy to secure alimony or child support obligations. Lenders may require being named irrevocably on a key person policy used as loan collateral. Once in place, these designations complicate later planning because the beneficiary's written consent is generally needed to change beneficiaries, reduce face amount, surrender coverage, or sometimes even execute a 1035 exchange. Advisors must review existing policies carefully to determine whether beneficiaries are revocable or irrevocable before recommending changes. They also explain to clients that naming someone as an irrevocable beneficiary should be treated as a serious, long term commitment, suitable when security and enforceability are more important than ongoing flexibility in life insurance planning.