What Is An Ownership Clause In A Life Insurance Policy?By Lisa Olsen Posted in Life Insurance News
Be Sure That Your Family Members Are Taken Care Of By Purchasing Life Insurance
Although a scary thought, it is important that you take the proper previsions to ensure that your family members are financially secure if you were to pass unexpectedly. Insurance companies sell life insurance policies for just this purpose. With a life insurance policy the policyholder will pay a monthly premium or one lump sum, and in return that insurance company will pay out money to a designated party in the event that the policyholder dies or becomes terminally ill.
The type of policy and the amount of coverage that the policyholder purchased determines the amount of money that the insurance company will pay out. Typically the more the policyholder pays in monthly premiums the more life insurance coverage he or she will have. However, shopping around for the best policy will ensure good coverage for an affordable life insurance rate.
The Ownership Clause Designates Who The Beneficiary Of The Insurance Policy Is
When a policyholder dies or becomes terminally ill, the life insurance company can obviously no longer conduct business with this person anymore. From this point on the insurance company will deal with the party who will be receiving the benefits of the life insurance policy. This party can be one single person or several, and they are known as the beneficiaries of the insurance policy.
At the time that the policy is purchased the original policyholder determines who the beneficiaries are and how much each one will receive from the insurance company in the event of their death. In the actual life insurance contract, the clause that designates the owner/beneficiary of the life insurance policy is know as the ownership clause. In the ownership clause the owner of the policy is always someone other that life insurance policyholder. Insurance companies allow the ownership clause to be amended by the insured individual. This means that the policyholder has complete control over who will receive benefits from the insurance company if he or she passes.
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