Can The Owner Of The Policy be Changed?
You can change the owner of the policy through a “deed of ownership”. These are not provided by the insurance company and would have to be written up through a solicitor. You may need to change the owner of the policy if your company ceases trading, or you leave and want to transfer the policy to a personal cover.
The owner of an insurance policy is the person or entity with the legal rights to control and manage the policy. To change the owner of a Key Person Insurance policy, you typically need to follow these steps:
Review the Policy Terms and Conditions:
- Before proceeding with any changes, carefully review the terms and conditions of the insurance policy. Pay attention to any provisions related to policy ownership and transferability.
Identify the New Owner:
- Determine who the new owner of the policy will be. This could be another individual, a business entity, or a trust. Ensure that the new owner is legally eligible to own and manage the policy.
Contact the Insurance Provider:
- Reach out to the insurance company or your insurance agent to inform them of your intention to change the policy owner. They will provide you with the necessary forms and guidance for this process.
Complete the Required Forms:
- The insurance company will typically provide forms for the policy ownership change. These forms may include an application for transfer of ownership and may require the signatures of both the current owner (assignor) and the new owner (assignee).
Provide Necessary Documentation:
- Depending on the circumstances, you may be required to provide documentation to support the change in ownership. This could include legal documents, such as a trust agreement or corporate resolutions, if applicable.
Underwriting and Approval:
- The insurance company may need to underwrite the change in ownership, just as they did when the policy was originally issued. This may involve assessing the new owner’s insurable interest and eligibility.
Review and Confirmation:
- Once the insurance company reviews the submitted forms and documentation, they will confirm the change in ownership in writing, specifying the effective date of the change.
Payment of Premiums:
- Ensure that the premium payments for the policy continue to be made by the new owner. The payment responsibility may also be specified in the policy.
Update Beneficiary Designations (if needed):
- Depending on the new owner’s relationship to the insured individual and the purpose of the policy, you may need to update the beneficiary designations to reflect the new ownership arrangement.
- Maintain records of all correspondence and documentation related to the change in ownership for your records.
It’s important to note that the ability to change the owner of a Key Person Insurance policy may be subject to certain limitations and the specific terms of the policy. Additionally, tax implications and legal considerations may apply, especially when transferring ownership to a trust or a different legal entity. Therefore, it’s advisable to consult with legal and financial professionals to ensure that the change in ownership is carried out correctly and in compliance with all applicable laws and regulations.