Life Insurance is a contract between the policy owner and the insurance carrier,
where the insurer agrees to pay a stated sum of money upon the occurrence of the
insured person's death or other contracted event, such as a terminal illness or a
In return, the policy owner or payer agrees to pay a contracted amount called a premium
at pre-determined intervals, monthly, yearly, or in a lump sum.
The policy beneficiary will receive the proceeds upon the insured's death, or triggered
event. The owner of the policy designates the beneficiary, but the beneficiary is
not a party to the policy.
The policy owner can change the beneficiary unless the policy has an irrevocable
beneficiary designation. With an irrevocable beneficiary, that beneficiary must agree
to any beneficiary changes, policy assignments, or borrowing of cash value.
Some uses of Life Insurance policy funds include: Maintaining of the lifestyle your
family has grown accustom to, mortgage pay off, credit card debt, college tuition,
funeral expenses, funding of a business buy & sell agreement, charitable giving,
As a general rule, the proceeds of life insurance policies pass to the beneficiary
tax free. Please consult with your Attorney or Tax Advisor.