You have two that want to change the beneficiary and the third one doesn't you can’t change the beneficiary. So, if two of the children want to cash in the policy and the third one doesn’t, you can’t cash it in. If I have three children, for instance, if I make all three of them owners of the policy, no one child can do anything without the other two. He might name someone else as the beneficiary, but generally he would name himself as the beneficiary. In that case, again, there might be three people. Yes, you could certainly have adult, responsible children as the owner of the policy. One advantage of having the spouse own the policy, for instance, is if the insured is worried about creditor problems having the policy owned by the spouse ought to solve that for the insured.īut could you have your children as an owner? Other insureds might be more comfortable with their spouse owning the policy. If they're paying the premium, they want to own the policy. And again, it may depend upon the relationship between the spouses.Īgain, some insureds are control freaks. Again, she would have full control over the policy and, as the insured, I’d have to be willing to have her do that. She’d be the owner, and she might be the beneficiary, or she might name our son as the beneficiary. So, in that case, there would be three people involved. The next possible owner, in no special order, is my spouse. If, at some point, my son and I have a falling out I have the right to change the beneficiary. So, if I own the policy on my life, I’m both the insured and the owner, I name my son as the beneficiary. They want to have the right to change the beneficiary. If the policy has investment choices, they want to make those choices. They want to make the decisions about the policy. They're the one who are paying the premium and, in general, I think, they want to control the policy. The insured’s the one whose life is insured. My sense is, most life insurance policies are owned by the insured. There’d still be a beneficiary but there wouldn’t be a separate owner from the insured. So, in this case, there’d be only two people involved in the policy because the insured and the owner would be the same. Yeah, the first person people think about as the policy owner is the insured. So, Larry, maybe you can talk a little bit about the different owners? So, one, might be the insured? But there are usually three people involved in policy: the insured, the owner, and a beneficiary. Sometimes the categories overlap, as we’ll talk about. So, all life insurance policies have three people involved, three categories of people. That’s the person, sometimes an entity like a corporation or a partnership or a trust, that’s entitled to receive the death proceeds of the policy at the death of the insured. And the third person involved in the insurance policy is the beneficiary. They have absolute control over the policy during the insured’s lifetime. They have the power, if they want, to surrender the policy, to sell the policy, to gift the policy, to change the policy death benefit beneficiary. The owner is the person who has control of the policy during the insured’s lifetime. There are a number of choices for who can own a policy but every policy has an owner. The other person involved in a life insurance policy is the owner of the policy. So, you can have a single life insured or you can have multiple lives insured, but every policy has an insured or insureds. Some life insurance policies insure two insureds, usually husband and wife, payable only at the death of the survivor. And every life insurance policy has a named insured. That’s usually the person who’s going to pay the premium. That’s the person that has to take the physical to get the policy. The first person, if you will, is the insured, whose life is being insured. I think probably the way to begin this is to remind people that there are a number of individuals involved in any life insurance policy. So, right off the top, who’s available as the owner of a life insurance policy? Today, I guess your topic is choices of life insurance policy ownership. I’m an ACTEC Fellow in Chicago and today I’m here with Larry Brody, an ACTEC Fellow in St.
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