- How to transfer life insurance ownership
- June 8, 2015
McGill’s Life Insurance defines policy owner rights as the following:
· Surrender the policy
· Assign the policy
· Designate and change the beneficiary
· Obtain a policy loan (if the policy has cash value)
· Select and change dividend options (if the policy is participating)
· Select and change investment options (if policy is variable)
· Select settlement options
As the law assumes, a person may freely assign or transfer any property interest that he or she possesses. Therefore, as with most items of real or personal property, the owner may transfer the life insurance contract by sale, absolute assignment or gift. To protect the rights of the insurer, the transferee and the policy owner, a contract will define how a transfer will be effective.
Generally transferring ownership is a result of a divorce or a gift and you need to follow the steps to assure the changes:
Contact your insurance company. Every life insurance policy can vary especially if it is large and is considered part of your estate. There could be potential tax consequences. Set up a meeting and discuss your intentions with your agent.
After doing so, you can request change of policy owner form. The document such as American General Life Insurance change form is on the web with specific phone and fax numbers you will need.
Complete the form, which usually includes your name, address, phone, date of birth and social security number and the same for the new policy holder’s personal information.
Your original policy number is also required.
Billing information is also added since the new owner may still be paying on the premium and he or she may choose how they would prefer to pay through an existing bank draft, direct bill and the frequency of payment. This means whether the premium will be paid annually, semi-annual, quarterly, or monthly.
Additional requirements may be needed in addition to the change of ownership form. Pending corporate owned policies may require a corporate seal or letterhead, signed by an officer on behalf of the company. Partnership agreements may also be included as well as a Power of Attorney.
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