If Joe Has Life Insurance On John And Pays In Full, What Happens To Life Insurance When Joe Dies?

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   J Paul Wilson CFP, CHFC

   Certified Financial Planner, JPW Insurance Retirement Investments, Halifax, Nova Scotia, Canada

   Joe is the owner of policy and as the owner and if no contingent owner is named the ownership the policy would pass to Joe's estate. The policy would remain in force as long as the premiums are continued to be paid. Then of course there is the issue of a beneficiary in the event of John's death. Naming a contingent or successor owner is strongly recommended

   Answered on November 28, 2016

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   Steve Kobrin

   President, The Firm of Steven H. Kobrin, LUTCF, 6-05 Saddle River Rd #103, Fair Lawn, NJ 07410

   It's a really good question. It makes you think about who is going to manage your estate when you pass on. Who will own your assets, including your life insurance? Who will pay for that policy?
   
   If Joe dies, then who will pay for the insurance on John? It could be that the coverage would no longer be needed, so the policy could lapse or be surrendered. But what if the coverage is still needed, for example to take care of debts in Joe’s estate? He really needs to designate an executor to keep up premium payments. The insurance carrier would need that person to step forward and contact them to take over the policy.
   
   Let's suppose that Joe wanted some kind a division of labor: his executor - perhaps his accountant, or other professional advisor – could take care of his general estate, but another person, such as his brother, would manage the life insurance - maybe to keep it all in the family. In that case he should name his brother as a successor owner so he would have full control.

   Answered on December 29, 2016

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