Life Insurance on Spouse
Can one spouse be the owner of a life insurance policy on the other spouse?
Newly married couple, male of which is divorced from previous spouse and owns policy which names his daughters as beneficiaries. He will take out another policy which names his new spouse as beneficiary, but since he is the owner that beneficiary could be changed without the new spouse knowing it.
To my thinking, if the new spouse takes out a policy (as owner) on her husband, then only she could change the beneficiary and the husband has no control. Just want to make sure new female spouse has complete control of the beneficiary designation.
Your thoughts and comments please.
Permalink Submitted by Lee Martinson on Fri, 2011-08-05 03:34
New spouse could do that. It sounds like new spouse would take out policy on husband and make herself beneficiary, which is fine. And you are right, it is the owner of the policy that controls the naming or changing of the beneficiary.
Just one word of caution, there can be tax implications if the owner is different from the insured and is not the beneficiary.
Permalink Submitted by fairira on Fri, 2011-08-05 21:07
Re: “Just one word of caution, there can be tax implications if the owner is different from the insured and is not the beneficiary.”
Please advise those tax implications. For example, a wife takes out a policy on her husband and names an adult child as the beneficiary.
Permalink Submitted by Lee Martinson on Sat, 2011-08-06 19:09
My understanding is that any time you have a third party beneficiary, which occurs when you have someone other than the insured as the owner, AND under that condition you have a beneficiary who is not an owner, once the insured dies, the death benefit received by that non-owner beneficiary is considered to be a completed gift and subject to gift taxes.
Lee