Many first time life insurance policy shoppers are often not even aware of the process they must go through to obtain life insurance. That being said, this blog topic is more focused on individuals that have already gone through the process of obtaining insurance and are now worried about transferring ownership. As a policyholder, you have control over whether the policy stays active or not and most likely who the named beneficiaries are. Some might find this an odd topic. After all, who in their right mind would ever transfer a life insurance policy after making premium payments for quite some time? In fact, many people transfer ownership of their policies in the future. Whether due to the inability to make payments on their own and needing to sell the policy to a third party, or even the more common transfer of moving your policy in to a trust, people make these transfers for various reasons.
With transfers of ownership pertaining to a life insurance policy being so common, it is important to understand the process of such a transfer in case this type of thing ever crosses your path. The first step in this process is to go over your options with your insurance provider and to analyze your insurance policy documents. Making sure your transfer is permissible with the provider is the first step towards a smooth transition. Often times, a policyholder will simply need to file a form with the provider changing ownership. In some scenarios, the provider may require additional steps to make sure the transfer is permitted. The provider may also be particularly strict on certain types of transfers as it may put them at additional risk financially.
After the paperwork is completed, it is important for the former policyholder and the new presumed policyholder to follow up and make sure everything goes as planned. It is not enough to simply file the paperwork and assume the insurance provider will take care of the rest for you. By following up with your provider, you can ensure that the new ownership structure is properly implemented. Once the policy has the correct owner listed, you can rest assured that things have processed appropriately.
Without trying to sound like a broken record, it is important for the parties involved in a transfer to make sure things go as planned. The reason for this is that if things do not transfer as planned, it comes at no loss for the insurance provider when there is a problem with the appropriate owner/beneficiaries looking for answers down the road. The insurance provider will simply deny any claims that come through as an incorrect owner or beneficiary making demands and pocket the money instead. If the old and new owners are not diligent in following up on a transfer, the process can easily go wrong and result in a mess when the time comes to file claims. While this sort of transfer may not always need legal consultation, do not be afraid to seek out help if your situation becomes more complicated than originally expected.