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Who should be Your Policy’s Owner

As if there isn’t enough to think about when you take out a life insurance policy, you also have to think about whom you are going to name as owner because you don’t have to be the owner of your policy, you simply have to be the insured.

What does the owner get?

The owner is the only individual who is permitted to make changes to the policy. They can change the primary beneficiary, contingent beneficiary, and assign ownership to another individual, or even a company. The owner can also borrow from the cash value in the policy and even surrender the policy so that there is no more policy or death benefit to speak of.

Additionally, if you have a question about the policy and try to call the insurance company to ask inquire about it, the insurance company will not be able to talk to you if you are not the owner. Because technically, even though you are the insured on the policy, it is not your property.

Why You should Rethink NOT being the Owner

For these reasons, it might not be a good idea to assign ownership to another individual. Think about it, what if you name your spouse the beneficiary of your policy, then you divorce? What could happen to your policy then? Or if you have a major falling out with the relative that you entrust with the ownership of the policy?

It is never a bad idea for you to secure control over your own life and insurance. If you think that you might become incapacitated at some point and want to be able to have someone else step in to control your policy when you are, you can appoint a power of attorney to take over or you can make a revocable trust the owner and then the secondary trustee will take over when you no longer can.

January 25, 2011

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