Transferring a Life Insurance Policy While the Insured Is Alive

Can a Living Person Sign Over a Life Insurance Policy?

Yes, the insured or the current owner can legally transfer ownership of a life insurance policy to another person while still alive, provided the policy permits assignment and the insurer approves the change.

How the Transfer Works

The policy owner signs an assignment form naming the new owner. The insurer then updates its records, and the new owner assumes all rights, including the ability to change beneficiaries, borrow against cash value, or surrender the policy.

Key Requirements

• Owner must be the person signing the assignment; the insured can be different.
• Policy must allow assignment—most term policies do, while some whole‑life contracts have restrictions.
• Insurer's consent is usually required; they may request proof of identity and a notarized document.

Impact on Beneficiaries and Coverage

Changing ownership does not alter the death benefit amount or the insured's health status. However, the new owner can rename beneficiaries, which may affect estate planning or tax outcomes.

Common Reasons for Assignment

Transfers are often used for business purposes (key person insurance), to fund a trust, or to give a spouse control over the policy's cash value.

Potential Limitations

Some policies include a "transfer‑of‑ownership" clause that restricts assignment within a certain period after issuance, or they may impose a fee. Additionally, if the policy is subject to a loan, the outstanding balance remains attached to the policy after transfer.

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