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Life insurance policy ownership
The insured or the beneficiary: Who actually owns a life insurance policy?
How does life insurance policy ownership work?
There are three main components to a life insurance policy: The owner, the life insured and the beneficiary. Depending on the ownership type, the policy owner is generally either the insured or the beneficiary.
- The policy owner. The policy owner pays for the policy and has full and total control to cancel or change the policy. The owner can be either the insured or the beneficiary, and some policies may have more than one owner.
- The beneficiary. This is the person who files a claim with the insurer and receives the payment if the life insured dies. Some policies may have more than one beneficiary.
- The life insured. This is the person whose life is insured against them passing away. If the life insured passes away within the term of the policy, then a payment is made to the beneficiary.
What are the responsibilities of the policy owner?
The key roles of the policy owner can include:
- Canceling the policy
- Updating the policy to include additional benefits or options
- Adjusting the amount insured
- Transferring policy ownership
- Naming beneficiaries and updating as needed
- Becoming the default beneficiary if there’s no beneficiary selected
- Paying for premiums
Who can be the owner of a life insurance policy?
Several types of policy ownership are available. Policy ownership can usually be changed, depending on the terms of the policy.
- Self ownership. Self-owned policies are perhaps the most common form of life insurance. The life insured owns the policy and has full control over their own life insurance.
- Ownership on someone else. This form of ownership allows you to take out life insurance on someone else, while naming yourself as the beneficiary. However, you’ll need the person’s permission, and you’ll have to prove insurable interest — proof that you’d suffer financially if the die.
- Cross ownership. This common approach for married couples involves each spouse owning their partner’s policy. Cross ownership has its advantages, especially for those who rely on someone else for a stream of income. However, if you get divorced and you have cross owned life insurance policies, difficulties may arise.
- Joint ownership. A hybrid of self and cross ownership, joint ownership allows you to still have some control over your policy. However, keep in mind that any proposed changes to the policy must be approved and signed off by both owners. Once again, a divorce or relationship breakdown can result in difficulties.
- Business ownership. Insurance policies can also be owned by a corporate entity. Businesses may take out key person insurance on an employee to cover the loss of revenue resulting from the loss of a key person.
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What happens if the life insurance policy owner dies?
What happens in these circumstances depends on whether the owner of the policy is also the life insured or not. If the policy owner and the life insured are one and the same, a benefit will be paid to the beneficiary and the policy will then be terminated.
However, if the policy owner is not the life insured, ownership of the policy would become part of the deceased’s will. Ownership can then be passed on according to the terms of the will. If no such terms are in the will, ownership will be set by laws of intestate succession.
What happens if the beneficiary dies?
If a person listed as a primary beneficiary dies before the life insured, the payment passes to others listed on the policy — these people are known as contingent beneficiaries. If all named beneficiaries die and the policy owner does not add any new beneficiaries, the policy owner becomes the beneficiary. After the policy owner dies, the money will to their estate.
What can I update on my life insurance policy?
It’s not uncommon for people to make adjustments to their life insurance policy as situations change. Such changes can include:
- Change of policy owner
- Change of policy beneficiary
- Change of payment frequency
- Change of amount insured
- Change of address listed on the policy
- Change of name on policy
In the event that you need to make adjustments to your policy, each insurer will have forms located on their website that can be accessed to request a change to the policy ownership or beneficiary. It’s worth noting that the policy can only be updated by the policy owner.
Bottom line
There are many different types of life insurance and ways to structure a policy. Talk with your loved ones to decide which option works best for you. And to get the best deal on a new policy, compare life insurance providers.
Frequently asked questions
Ask an Expert
Can a third party that has access to the policy number be prosecuted for making a change of address to receive the policy information to their address?
Hi Cathy,
Thanks for your inquiry.
Please note that Finder is here to help you make the best financial decisions possible. However, this does not extend into matters of illegality, and therefore we are unable to provide you with information that may constitute legal advice. It’s best to reach out to an attorney that specializes in these matters to give you legal advice.
I hope this helps.
Kind regards,
Bella
My father just bought a life policy to me, where he is the policy owner and I am the insured.
May I know if he nominates me as the only beneficiary, will the insurance ownership be transfer to mine? Or it will form part of my estate?
Ia there a way to transfer the ownership of this policy to me when he passes on without stating it in his will?
Hi Christine,
Thanks for contacting Finder.
You may want to review your policy or contact your insurer to know if your father nominates you as the only beneficiary. Basically, the owner can be either the insured, the beneficiary or a joint ownership between the two parties. Your father has full and total control and can cancel or change the policy. In the event that the life insurance policy owner dies, ownership of the policy would become part of the deceased’s will. Ownership can then be passed on according to the terms of the will. If no such terms are in the will, ownership will be set by laws of intestate succession.
I hope that helps.
Kind Regards,
Faye
I was contacted by a life insurance company about my “estate”. Apparently it was opened in error, as I am still alive. It did however lead to me discovering that my grandpa, who passed in 2011 opened this policy on me when I was a baby, I am the insured person. He was the policy owner, and is now deceased. I was told that I need to have whoever was the executor of his estate send documentation in and that they can give them all of the information regarding the policy and I can be appointed as the policy owner. Obviously his estate has been closed for nearly a decade, I don’t know how that influences things. Is this something I can cash out? My grandma, his wife, passed away two years ago. Thank you!
Hi Brittany,
Thank you for leaving a question.
If the policy owner is not the life insured, ownership of the policy would become part of the deceased’s will. Ownership can then be passed on according to the terms of the will. If no such terms are in the will, ownership will be set by laws of intestate succession. If you have documentation to prove that your name is on the policy or the will then you may contact the insurer directly to check on how to cash out money.
Hope this helps.
Regards,
Val
How can I change the policy owner on my life insurance policy if the current owner is in jail?
Hi Deedee,
Thanks for getting in touch with Finder. I hope all is well with you. :)
Generally, it is only the policy owner who can give up ownership of the policy. This means that you would need the consent and cooperation of the current owner. You can then contact the insurer to obtain a change of policyholder form. The owner who is in jail can then accomplish that form and it is up to you who are outside the jail to take care of the rest.
Since changing of ownership can be different from one provider to another and your situation may differ, please discuss this with your insurer to ensure you are taking the right steps.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
Have a wonderful day!
Cheers,
Joshua
Been paying the premium on a policy to keep it from lapsing. However, when I contacted the issuing insurance company to find data on the owner, the insured, and beneficiary, I was told I could not have access to those names. How can this info be obtained legally?
Hi Horace,
Thanks for getting in touch with Finder. I hope all is well with you. :)
In most cases, you would need to find the owner of the policy to ask them directly for your needed information. If this does not work, you would need the help of a legal consultant. Speak with one of them and see how you can legally obtain these details.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
Have a wonderful day!
Cheers,
Joshua
My grand son is minor and I am in court if his father get full custody can I request that all my daughter estate go to my grand son when he reach 21 years my daughter and my grand son father was never living together
Hi Cindy,
Thank you for leaving a question. Transferring of ownership is possible but this depends on the insurer and the policy that you have. In such case for custody and all the queries involved, it would be a good idea to first discuss your options with your insurer.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
Regards,
Val
My dad opened a life insurance policy in my name he has passed .xan my sister take rge policy ans close it take tge money
Hi Jim,
Thank you for leaving a question.
If the policy owner is not the life insured, ownership of the policy would become part of the deceased’s will. Ownership can then be passed on according to the terms of the will. If no such terms are in the will, ownership will be set by laws of intestate succession. If you have documentation to show that you are the policy owner of the insurance that your dad opened for you, then this is something that you could inquire with the insurer on how the process should be. Hope this helps!
Cheers,
Reggie
Hi! My question is. I have been named successor of three insurance policies that my grandma had. She passed away. She was left the owner of them after my grandpa passed away. So before she got bad she named me as successor of them. Two of the insurance policies my brother and sister are the insured. And other one I’m the insured. My question is can my brother and sister sue me to get them. My grandma left them to me cause they are not responsible with money.
Hi Jamie,
Thank you for reaching out to finder.
If you being the successor is written and documented then you have the right over the succession of what your Grandfather bestowed upon you and suing you would become fruitless since it is the will of your Grandfather to you. You may want to speak with your siblings though to get to an agreement that would be okay between all of you just to ensure that the relationship is maintained between all of you. Hope this helps!
Cheers,
Reggie
Which would be easier on the person taking over a life insurance policy if the owner dies: Naming the person as a contingent owner or naming the person a joint owner?
Hi Mickey,
Thanks for getting in touch with finder. I hope all is well with you. :)
Generally, a contingent owner controls who owns a policy or an interest in it once the owner of the policy dies. It is worth remembering that the contingent owner has no rights under the policy as long as the original owner is alive.
On the other hand, if you are a joint owner, you both have the same total control of the policy.
Now, based on this information, you can better decide which route to take when purchasing a life insurance policy. It would also be a good idea to directly speak to your insurer and discuss your needs, preference, and budget. From there, your insurer should be able to present to you the best option.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
Have a wonderful day!
Cheers,
Joshua
I own my life insurance if I sign it over to my daughter and she changes the beneficiaries and I want it back can she sign it back to me using her husband’s signature and not hers or is that fraud
Hi Sharon,
Thanks for getting in touch with finder. I hope all is well with you. :)
It is possible to transfer the ownership of your life insurance. However, you may need to check with your insurer.
When it comes to transferring life insurance ownership, it is important to do it not just properly, but legally. Forging a signature may render your document as invalid and false. Not only that, you may potentially face criminal charges.
Before doing anything with your policy, it would be a good idea to first discuss your options with your insurer.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
Have a wonderful day!
Cheers,
Joshua