Who Can Own a Life Insurance Policy?

Who Can Own a Life Insurance Policy?

Anyone can own a life insurance policy - as long as insurable interest is proven on the life of the insured (meaning having some kind of financial interest). You should take into consideration the purpose of your life insurance policy when trying to determine who the owner of your insurance policy should be. The policy owner maintains all rights within the life insurance policy and pays the insurance premiums.

Policy owner rights include the following:

  • naming the beneficiary under the life insurance policy
  • having access to its cash value (as a loan or withdrawal)
  • receiving all correspondence from the insurance company
  • can make changes under certain policy provisions
  • has the ability to cancel or surrender the policy

If the reason you are buying personal life insurance is to cover debts, income replacement or family protection, it is suggested that you would be the owner of the life insurance. If you’re married, you might consider having your spouse as the policy owner. You may consider having a Trust established and have that entity own the insurance policy, should you have minor children. If you’re a parent, you may own a life insurance policy on your child(ren) to begin to establish their future needs or if you’ve co-signed for their student loans.

For instance, you are purchasing a home with a friend or partner and are both on the mortgage deed/lien, you might purchase and own a life insurance policy on their life and visa-versa.

For business life insurance, the policy owner may be the corporation (key man life insurance or for under buy-sell agreements), or may be your business partner (under a buy-sell agreement).

While you are buying life insurance and find you need advice on structuring the ownership of your policy, please talk with one of our licensed insurance professionals, or even a family/estate attorney. Proper structure ensures that the financial needs of your beneficiaries will be met when they need it the most.

About the author: Melanie Tretheway has been in the life insurance business for over 30 years. She is a mother of two who loves baking, reading, gardening, and taking care of her family. Melanie takes great pride in making sure you are informed, especially when it comes to choosing the right life insurance policy for your family. You can contact Melanie at 1-800-651-1953 or MTretheway@Pivot.com.