Life insurance is in place as a financial safety net in the event that someone dies. If an individual passes away who is a financial provider for a family that family needs to have a way to supplement the lost income. This is especially the case if the individual who dies is the sole provider for that family. When you purchase a life insurance policy you are what is known as the policyholder.
By buying the insurance policy you are agreeing to a legal contract that states that you will pay the established insurance premiums on a regular scheduled basis and if you pass away a set amount of money will be paid out to your beneficiaries. In your policy contract you designate who your beneficiary or beneficiaries are and how much of the benefits each one will receive.
The Ownership Clause Designates Who Has The Ownership Rights To A Life Insurance Policy
Many times the insured individual holds the ownership rights to the life insurance policy. The owner of the insurance policy has the ability to designate who the beneficiaries of the policy are. Sometimes however, ownership of the life insurance policy can be vested in someone other than the insured person. An ownership clause is a provision written into a life insurance policy that designates who the owner of the policy is when the policyholder is not named the policy’s owner. When a life insurance policy has an ownership clause written into it often times the beneficiary of the policy is designated as the owner.
It is not always the case that ownership rights of a life insurance policy belongs to someone other than the policyholder. When you purchase a life insurance plan you have to decide if you want to have the right to name the beneficiaries or if you will designate someone else as owner of the policy.