If a company pays the premium on a term life insurance policy, can the beneficiary be anyone?

Question

If a company pays the premium on a term life insurance policy, can the beneficiary be anyone?

Answer 1

to the first poster, Insurable Interest has absolutely nothing to do with the designation of beneficiaries. Insurable interest refers to whether a person can or can't purchase insurance on another individual. When it comes to beneficiaries you can leave the money to a complete stranger if you want, it doesn't matter.



To answer the question...In most cases if this is a policy where the company owns the policy on the person and it's not a group/employee benefit the company would decide who the beneficiary is (In 99.9% of cases the company itself is the beneficiary so the money can be used to train/hire a replacement for this person). As mentioned this is known as key person insurance, where the company is basically saying "We have insurable interest in this person becuase they are a key factor in the success of this company and if this individual dies we will incur a significant loss in business and it would take a substantial amount of money to replace this person"



If this is a policy that is some kind of benefit for working there like employee benefits like Medical and dental, then the employee would be able to elect whom ever they want as the beneficiary.

Answer 2

The beneficiary is determined by the policyowner for individual insurance. It may be different for group insurance, but the policyholder in this case usually designates the beneficiary. My question to you would be, first, is the 'company' in your question an employer or the insurance company? If it's an insurance company, I would tell you to review your 'waiver of premium' rider, which are very restrictive on term policies. I'm assuming it's a group policy provided by an employer. In any case, the beneficiary can be anyone - and they have no right to access the policy ever to find out if they are the beneficiary. I could name you in my life policy and you would have no rights whatsoever to the information in the policy. There is a difference if the beneficiary is 'irrevocable', in which case you would have to be notified about the policy and provide a signature during the process.

Answer 3

The beneficiary can be anyone with insurable interest in the life of the insured. In other words, someone that would be better off with you alive than with $1 million. That could be a family member or a business partner.



Now there may be some tax issues here. Typically life insurance premiums are not tax deductible for individuals, but they are companies if the insurance has a legitimate business reason. Talk to a good tax accountant if this is the heart of what you are trying to get at.

Answer 4

So the company owns the policy. If the company is also the beneficiary, it is a key man policy. If the beneficiary is a personal benefit of the employee, it is a split dollar policy.



Key man policies are simple and straight forward. If it is split dollar, talk to your accountant about whether loan regime or economic benefit would be better for your needs.

Answer 5

Either the company is paying because this is "key man" coverage, in which case the company is the beneficiary, or it's a benefit of employment, in which case the employee picks the beneficiary.

Answer 6

The listed policy owner has the right to specify any beneficiary and has the right to change the beneficiary at any time.



Please note that the premium payer is not necessarily the policy owner.

Answer 7

the beneficiary have to have insurable interest brother,sister,wife,kids, relatives even you the company.after a policy has been issued you can change the beneficiary to who ever you want

Answer 8

I am an insurance agent and yes you can. Only thing stopping that is if it was for a lot of money like 1,000,000.00