Life Insurance Policy Ownership Rights

A life insurance policy is a type of property

• • Real property vs. personal property
• • Intangible property

Life insurance policyowners have a number of rights, including:

• Right to name and change primary and contingent beneficiaries and transfer ownership of policy

• Unlimited right to change the beneficiary, unless policy has irrevocable beneficiary

• Applicant selects and can change policy’s premium payment mode

• Participating policyowner receives some of company’s divisible surplus by choosing one of several dividend options; nonparticipating policyowner doesn’t get dividends

• o Options for receiving policy dividends: cash dividend, premium reduction, policy loan repayment, accumulation at interest, paid-up additional insurance, additional term insurance

• Settlement options provision grants policyowner or beneficiaries choices about receiving policy proceeds.

• o Settlement options: interest option, fixed-period option, fixed-amount option, life income option

• Policyowner can transfer ownership to another person

• Assignment provision describes insurer’s and policyowner’s roles under absolute andcollateral assignments, accomplished by separate agreement signed by parties or by endorsement