These are technical issues, extremely important technical issues that must be addressed. It is of the utmost importance, in the process of designing and maintaining a life insurance plan, to understand these two crucial roles: Who owns the policy and who are the designated beneficiaries.

The Owner of a life insurance policy has all the rights to the policy while the insured is alive, and therefore is the most important designation to be decided. Only the Owner can access the cash value of a Whole Life policy, request changes to any policy, including changes to ownership, beneficiary designations, coverage amount, non-forfeiture options, etc. There are countless possible scenarios but it is generally advisable for the person who pays the premiums to be the designated owner of the policy, with a responsible back up designated as contingent owner.

The designated Beneficiary of the policy has all the rights to the proceeds of the policy if the insured dies. Except in the case of an Irrevocable Beneficiary, beneficiaries typically have no rights to the policy until the death of the insured. Which persons who care for you and your loved ones are most likely to understand, respect and follow your intent for the proceeds of the policy in your absence? Beneficiary designations can be as straightforward as a single primary beneficiary, although a contingent beneficiary is most often advisable. More complex beneficiary designations including Trusts will usually require the assistance of an attorney.

***This article expresses the views held here at StrongBox, not those of any insurance carrier represented by the author.