The owner of a life insurance policy is the person named in the contract with the insurance company. Commonly that would be the insured person, but there are instances in which ownership is sometimes transferred--often to a spouse or close relative, but sometimes to an investor company. If you have signed away the ownership of your life insurance policy it can be difficult in future to dispute that change and reassert your ownership; transfer of ownership is usually regarded as an "irrevocable event."

Reasons to Transfer or Sell

Transfer of ownership to a spouse or other relative can often be an estate planning tool to minimize tax liabilities. Some people, usually those suffering from a terminal illness, may make what's known as a "viatical settlement"--selling their policy to a company which will provide a lump sum in cash, usually a percentage of the policy's face value. But insured persons are counseled to think long and hard before transferring or selling the ownership of their policy, as it may have serious long-term financial implications.

The Importance of Contract Law

Because an insurance policy is a contract, such a transfer or sale is governed by contract law in your state, and the only circumstances in which you might be able to dispute ownership after a change is if you believe that there has been a breach of contract law, such as an attempt to defraud you by an investor company. The first place to turn would be your state insurance department, which has consumer protection specialists who will be able to counsel you on the particular circumstances of your case.

Legal Help

If you believe you may have a case, it will be important to retain an attorney who is an expert in this area of the law, as such transactions can be highly complex.

Divorce Situations

Occasionally an insured person may transfer her policy to a spouse for tax reasons, but then may subsequently divorce. If this is your situation, provided that the paperwork in the original transaction was all properly completed, you unfortunately have no recourse to recover ownership of your policy. The divorced spouse retains the right to sell or transfer the policy, and also to name the beneficiaries. This is another reason why insured persons should think very carefully about signing away control over a major investment such as life insurance.

Source:

Life Insurance: The Impact of Ownership

Elder Care Online: Understanding Viatical Settlements