Many factors go into purchasing a life insurance policy that suits your needs. And, like any part of your overall financial plan, your insurance program doesn’t end once you’ve decided on a policy and purchased it. Certain decisions and actions should be taken over the policy’s life, beginning with deciding who should be the policy owner and determining how to fund the premiums and then monitoring the policy on an ongoing basis to ensure that it continues to perform as expected and meet your objectives.

Ownership Options

You have several options when determining who should own the life insurance policy.

  • The policy is owned by the insured. This option is the most flexible for making changes, such as selecting your designated beneficiaries or terminating the policy. Generally, policy proceeds are included in your estate for tax purposes upon your death.
  • The policy is owned by a spouse or other family member. This option gives you less control if you are the insured but comes with potential tax deferral benefits. Upon your death, generally, the policy’s proceeds are excluded from your estate but included as an asset in the policy owner’s estate, even if the policy owner predeceases you.
  • The policy is owned by an irrevocable life insurance trust (ILIT). With this option, the policy is considered an irrevocable gift to the trust, and the trustee controls the policy. Since policy proceeds are usually excluded from the estates of the insured and the policy’s beneficiaries, the trust provides potential tax and asset protection advantages.


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