What is an Owner?
An owner is the person or entity that holds the rights, control, and legal title over a property, asset, or policy. In the context of life insurance, the owner is the individual or organization that has purchased the policy, pays the premiums, and holds specific rights. These rights include the ability to change beneficiaries, access policy loans, or surrender the policy for its cash value, depending on the type of policy.
For life insurance, the owner can be different from the insured—the person whose life is covered by the policy. This means a spouse, business partner, or parent might own a policy on someone else. For instance, a parent might own a life insurance policy on their child, or a business might own policies on key employees. Ownership grants significant control over the policy’s terms and management, which can be vital in personal financial planning or business succession planning.
Moreover, ownership plays a crucial role in determining tax implications, policy dividends, and benefits. For example, if a policy is owned by a business, the business may be able to access policy loans to fund operations, or it might structure the policy as part of an employee’s benefits package. In contrast, individual policy ownership can affect estate planning, especially if the policy’s death benefit contributes significantly to the estate’s total value.
Therefore, choosing who owns a life insurance policy should align with financial goals, tax planning, and the intended purpose of the coverage, as ownership determines who has control over the policy and its proceeds.
