Life Insurance ownership
Hi Terry,
I recently had to make an inquiry about my husband’s life insurance policy. Since I am not the OWNER of the policy, she could not talk to me. I do all kinds of personal work for my husband. Is it a good idea to make me the owner of the policy? I am already the beneficiary.
Terry Says
The OWNER of a life insurance policy can change the beneficiary at any time! (That’s why I always advise that in cases of a divorce the she woman should be the owner as well as the beneficiary!) Now, you’ve shown me another reason to be the owner of the policy. It’s easy to change the policy owner — but just make sure you don’t start a new one or two year “contestibility” period — a period during which if the insured dies, the insurance company can contest the benefits.
When estate tax limits were much lower, there was good reason to buy a life insurance policy inside a separate trust. When the “owner” of a policy dies, the face value of the benefits is included in his/her estate — although currently no taxes are due unless the total estate is will over $11 million. Thatcould change. But the beneficiary receives the money tax-free.
