Life insurance policies: what if I don't get married?

Question

I have a life insurance policy that my grandparents got for me when I was younger. Now, my questions is: If I never get married, who gets it when I die? And is it possible to take money out of the policy if I want to??

Answer 1

Regardless of whether or not you get married, the policy pays out to whomever your grandparents designated beneficiary, when they bought the policy.

You should ask them, or call the company and ask THEM. You'll have to ask the company if it's the kind of policy that you can take money out of the policy - but ONLY the policyholder can do that, and the policyholder may or may not be you.

Answer 2

Hi! Your friendly insurance guy here again.

To answer your questions:

1. When your grandparents purchased the policy they had to choose a beneficiary. If they are still living, ask them who it was. Normally your parents would be the chosen beneficiaries when a child is the insured so that if the child dies the parents can pay for a funeral.

2. If the policy is a Whole Life policy or other cash value policy, the owner may be able to receive funds from it while you are still living. Again, check with your grandparents to see who the current owner of the policy is.

One prior poster suggested canceling the policy. I beg you to NOT do this. If the policy is a fully paid up, lifetime coverage policy, why on earth would you cancel it? At some point you might marry or have kids and want life insurance. Whatever amount is currently in force will mean you have less to buy later.

Imagine:

Your parents bought you a $50,000 life insurance policy and it's fully paid up now. They give you ownership. Later, you get married and want to have a total of $100,000 of coverage. If you canceled the existing policy, now you are stuck buying $100,000 of insurance at the higher rates you will pay as an adult. If you keep it, you only need another $50,000 to reach your goal, which would save you a substantial sum of money each month.

Please, please find out if the policy is a fully paid up, lifetime coverage policy like a Whole Life plan. If it is, don't cancel it. You'll just end up wanting to repurchase coverage later and have to pay a lot more for it because you are older.

Answer 3

First, the ownership of the life insurance policy may have been transferred to you when you reached age 18. The life insurance company should state within the policy the age when the policy transfers ownership to a youth who has reached the age of majority. The actual age the ownership can change usually depends on what the life insurance company states in the policy.

If you own the policy, you may choose the beneficiary of the life insurance policy proceeds. You would decide who receives the death benefit if you were to die while the policy is in force.

As for whether you can take money out of the policy, it depends on a few things:

1) Is the policy a whole life policy. Whole life insurance policies may build cash value within the policy from which you may be able to take a loan out.

2) Is there cash value in the policy. There may or may not be any value that has built up within the policy at this time.

You could read the policy and look at these specific things within the policy itself - The Beneficiary Clause, Cash Value Withdrawals & Loans.

The name and phone number of the life insurance company should be listed on the face of your life insurance policy. You may want to call the company direct to get specific answers to these questions.

I hope that helps! Take care and best of luck.

Answer 4

If you have a life insurance policy and your grandparents took action to make you the owner of the policy, then you get to designate anybody you want to be the beneficiary.

It can be a person or even a charitable organization.

If it is a cash value policy, which I suspect it is, then you can take cash out of the policy and if there still is a loan balance when you die, the insurer will withhold the outstanding balance from the proceeds when it comes time to pay the death benefit.

Answer 5

The earlier answerers are right about the policy itself. Check it out and see if your grandparents made it where you actually are the policy owner. If you are, then you can decide who the money goes to. It doesn’t have to be a partner or a child; it can be about anyone you’d like it to be, including a charitable organization. As for taking money out of the policy, that depends on the type of policy it is. If it’s whole life, then there probably is a “cash value” associated with it that you can use to borrow against, but be very careful about cashing out of the account. Depending on your age, the above answerer is right; it might be wiser to retain the coverage, especially if it is paid in full.

You’re probably going to have to talk with a financial advisor or insurance expert so they can take your specific circumstance into account. If it’s a sizeable amount of money, I would pay a financial advisor to help you sort things out. And if someone is trying to sell you something, treat it like you would a medical condition: get a second or third or fourth opinion before committing to anything.

Good luck!
Barnes@MostChoice

www.mostchoice.com

Answer 6

My suggestion would be to check what type of policy do you have and has it break even or matured. What you could do it to check it with the insurance company over the phone if you are the policy owner. Because of the new change in regulation, the best way to distribute your insurance money (become part of your estate if you die) is through a written WILL else it will distributed according to law of intestacy. Alternative, if the policy have acquired cash value or matured, you could surrender the policy at the insurance office.

Answer 7

It depends if your beneficiary is revocable or irrevocable. If it is a revocable beneficiary then you can change it at any time by just contacting the insurance company and fill out a form. If it is an irrevocable beneficiary then you just need the permission of your current beneficiary to sign off it so you can designate a new one.

About taking the money out of the policy it depends on what policy you have, but most will allow you to take a loan out but most likely you will be charged a fee for early withdrawal. Like I said it all depends what plan you have.

Answer 8

Life insurance policy death benefits are paid to the named beneficiary. The owner of the policy gets to select and change the beneficiary.

The owner has the ability to withdraw any money that might be in the policy.

You need to find out if your grandparents still own your insurance policy. They can easily gift the policy to you if they do still own it.

Answer 9

You will need to contact the insurance company to find out what kind of life insurance it is, but if its the typical cheap policy that family members take out on baby's and small children, its probably term life and there isn't any money accrued for you to take out.

I would suggest you do one of two things. Simply cancel it if you have other insurance (maybe through your job) and you no longer need this policy. Or you can keep it, and make the beneficiary a niece or a nephew or simply the person who would be handling the disposing of your body and worldly goods.

Answer 10

If the policy is whole life then it is building cash value.If your grandparents transfered ownership to you then you now own the policy and you are the insured on that policy.The beneficiary can be changed to whoever you want,if you have no other relatives that you want on the policy then pick a funeral home as beneficary.