Do you know what your role is within your banking policy? There are three roles within every single banking policy you must understand. They are:
- The Policyowner
- The Insured
- The Beneficiary
This individual is the one who has complete control over that policy. This individual is responsible for making the premium deposits. Furthermore, loans are made payable only to this person.
This individual on the contract has the death benefit on their body. Most of the time the policyowner and the insured person are the same person. However, this is not always the case. A scenario where this may not be true is when a parent owns a policy on their child(ren).
What does this mean? It means to reap the benefits of the banking system, you must be the policyowner on the policy. But it doesn’t necessarily mean you must be the insured person on that policy. The policyowner has control and can access and use the cash value via policy loans. This means they are the ones with the power to use and benefit from the banking system.
The beneficiary is the last role involved in each contract. He or she receives the proceeds from the death benefit when the insured person on the policy passes or “graduates.”
The only role that can never be changed or transferred inside of these policy contracts is the role of the insured person. If this policy is to remain in force, the insured person must stay the same, even if the other two roles are transferred.
It’s important to be aware of the roles and responsibilities of each person within the contract. You can use this information, as policyowner, to make the best decisions for your policy both while you’re alive and after the insured person on the policy has “graduated,” thus, ensuring a lasting financial legacy.