Who are the different parties to a life insurance contract? How is a beneficiary determined for a life insurance?
What will be an ideal response?
There are four parties to a life insurance contract:
1. The insurance company issues the policy.
2. The owner of the policy is the person who contracts with the insurance company and pays the premiums.
3. The insured is the person whose life is insured.
4. The beneficiary is the person who is to receive the insurance proceeds when the insured dies.
The owner of the policy has the power to name the beneficiary of the insurance proceeds. Most life insurance contracts permit the owner to change beneficiaries. If no beneficiary is named, the proceeds go to the insured's estate. Often, the owner and the insured are the same person. For example, an owner can take out an insurance policy on his or her own life. The owner and beneficiary can also be the same person.
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