Who Should Be the Owner of a Life Insurance Policy?

The owner of a life insurance policy should be someone with an insurable interest in the person who is insured. Insurable interest must be established when the insurance application is submitted to the insurance company.

Self-Insure

A person should be the owner of an insurance policy on himself and can choose anyone to be the beneficiary. Insurable interest is self-evident in this case.

Spouse

A spouse should have an insurance policy on his or her spouse. A spouse would have insurable interest based on loss of household income in the event of death, or if the spouse does not contribute to household income, a burial insurance policy can be purchased to cover loss due to final expenses.

Parent

A parent should have a whole life insurance policy on a minor child to cover burial expenses and, more importantly, as an investment. A whole life juvenile policy can be given to the child when he or she becomes an adult. The cash values can be used to pay for continued education or a new vehicle. A whole life juvenile policy will also lock in the lower premium rate for life insurance and establish continued insurability.

Employer

Employers should have life insurance on key employees to cover company losses in the event of the employee's death.

Creditor

A creditor should have life insurance on a debtor to pay off the debt in the event of untimely or accidental death.

References

• Insurance.com: "What does insurable interest mean on a life insurance policy?"
• New York Life: "Buy Juvenile Insurance"