Sunday, July 20, 2008

Ownership of a life policy

Dear Mr. Tan,

My uncle (as policy holder) bought a life policy for his wife (as insured). If the policy holder passes away, does it mean that the ownership of the policy automatically transfers to his wife (the insured)? Or does it become a 'no ownership policy'. If it is the latter, who has the rights to deal with the policy, for instance, to take a policy loan/terminate it?

REPLY
Your uncle is the owner of the policy. On his death, the policy becomes part of his estate and the administrator of the estate (which is usually his wife) can deal with the policy in any suitable way, such as taking a loan or terminating it.

Your uncle has the choice of transferring the policy to his wife now and write in his will to transfer the policy to the wife on his death.
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1 comment:

meimei said...

Dear Mr Tan

What is a policy loan and why would the insured need to take up this loan when the policy holder passes away?

If a family has 2 parent and 2 child, one of the child pays for term life and health insur for both parents, in events of parent's death, does this policholder child takes the full insurance returns or is it split with the rest of the family? Can it be contested on the parents' will even if one child takes up the plan for the parents and pays for everything?

July 30, 2008 1:12 PM

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