Anyone
can own their own life insurance policy, when they are the insured person of the life insurance policy.
Sometimes people think that someone else should own their life
insurance policy for tax purposes, when the possibility of their estate ever
being large enough to incur estate taxes is nil, and life insurance does not
incur income taxes.
But
there are legitimate situations (for tax purposes and otherwise) where another
person owning the life insurance policy on your life may be a wise decision. To own the life insurance policy, that person must have a
financial interest in the life of the insured person. Meaning, the owner of the policy relies on the insured for financial support, or the owner would suffer financially if the insured person were to die. This is called having an "Insurable Interest" if the person you want to insure for life insurance.
It
is the owner of the life insurance policy who has the right to change the beneficiary. So be
careful when choosing an owner for your life insurance coverage.
If you want to reserve the right to choose the beneficiary of the life insurance policy, you should be the owner of the life insurance. The owner is responsible for paying the premiums on the life insurance.
