You own a life insurance policy – good for you! You can rest a little easier knowing if something happened to you, your loved ones would not struggle financially. Buying life insurance can sometimes be quite the process and for you the hard part is now over; however, life insurance isn’t a set-it-and-forget-it product. There are responsibilities that come with being a policyowner.
Being the owner of a life insurance policy means:
- You are the one who determines how long coverage lasts – either a certain term length or life-long.
- You are the one responsible for paying the policy premiums to make sure it stays inforce.
- You have the right to transfer ownership.
- You have the right to choose the beneficiaries and change them if necessary.
- You have the right to determine how the beneficiaries receive the death benefit proceeds.
- You have the option to borrow against or withdraw from policy cash values, if you own permanent insurance.
- You have the right to surrender or cancel the policy.
- You have the responsibility of reviewing the policy occasionally to ensure it is still structured most beneficially for you and your beneficiaries.
As policyowner, you have the right to transfer ownership to someone else, but you will lose all control of the policy. If you are considering transferring ownership, we recommend first discussing this with a tax attorney or contacting your Quotacy agent. Although the process of changing/transferring ownership is simple, the results could affect your policy and it may lose some of its tax benefits. It’s also important to note that if you transfer ownership, but die within three years of making this change, the policy proceeds may still be included in your estate, which may cause your beneficiaries to end up having to pay estate taxes on your behalf.
As mentioned previously, transferring ownership is simple. It’s typically only one or two forms you fill out and send in to the insurance company. You can contact your insurance company directly for these forms, or just contact us. We’ll make sure you get the correct forms. Let us know if you have any other questions – we’re here to help make your life easier.
Photo credit to: gnuckx