Ownership of Insurance Policy

Your insurance policy is property, and you own it. The policy is real and has value, even if you have a term life insurance policy. That means that you have certain rights associated with ownership. Among these are

• The right to choose your beneficiaries: As owner of the insurance policy, you get to decide who is the beneficiary when you die. You can change the beneficiary, assuming that you face no other legal restrictions, such as divorce agreements in which your dependent children are specifically named as beneficiaries.
• The right to cancel your policy: If you choose, you can cancel your policy at any point, either through written notice or by ceasing to make premium payments. You should note, however, that with some cash-value policies, any surrender value goes toward paying the premium. In addition, you may be required to pay cancellation charges.
• The right to convert your policy, assuming you buy that right as a rider: If you buy a term life insurance policy but include a rider that allows you to convert to a cash-value policy at a later date without any additional qualifying, you can opt for this conversion at your discretion. Note: If you increase the death benefit or face value, the company may require you to undergo a new medical exam and requalify, which defeats the whole purpose of buying the conversion rider.
• The right to cash in your surrender value at any time: Just as you have the right to cancel your policy, you have the right to take out whatever cash value you accrue, minus any cancellation charges or administrative fees.
• The right to exercise any options that your policy includes: If you include any riders or options in your policy, you can mandate how and when these options are exercised. With death benefit payments, however, your best bet may be to leave as many options open for your survivors as possible so that they can use the death benefit to suit their needs.