Owner vs Payor

[theleadingagent]

i have come into a few situations where parents want to buy a life policy for their adult children (over age 23)

Is the parent the payor and owner or just the payor?

 

[WinoBlues]

i have come into a few situations where parents want to buy a life policy for their adult children (over age 23)

Is the parent the payor and owner or just the payor?

Why are you asking us?

What do they want to do? The parents can be the owners, payors and beneficiaries. Or any one of them. In general, some companies can get touchy on the ownership. Fraternals have been the touchiest in my experience.

I own policies on some of my adult kids. Or should I say my wife does.

By the way, spouses can own policies on each other as well.

I owned policies on my mother and brother as well. No problem.

 

[theleadingagent]

Well cause I’m trying to figure out the logistics (as to what companies allow) and the why.

The manager telling me to do one thing but doesn’t explain why. So I’m trying to get an understanding.

In my rational mind I’d think that a parent paying would be would be the payor, beneficiary, AND the owner (since they’re paying they have the authority to make changes, etc).

I can’t understand why payor would not be the owner

 

[WinoBlues]

Well cause I’m trying to figure out the logistics (as to what companies allow) and the why.

I did not mean to not ask. Just that those are questions for the prospects.

The manager telling me to do one thing but doesn’t explain why. So I’m trying to get an understanding.

Then he sucks. As I remember you are somewhat new to this. Get what you can from them but understand you do not owe them any more loyalty than they show you. Don't go broke doing his job.

In my rational mind I’d think that a parent paying would be would be the payor, beneficiary, AND the owner (since they’re paying they have the authority to make changes, etc).

Many times that is exactly how it runs. I have had cases where the parent may make the wife the bene. By far the easiest route is have one person in charge that you deal with. Follow the money.

I can’t understand why payor would not be the owner

They may have their reasons, you would need to ask them. I assume these are going to be low premium policies. Maybe just ask 'who is going to be the owner payor?' Ask OK who is going to be the Bene. Be prepared for them to not understand they are not always the same.

I am not going to get into what happens at the claim if all three are different. Google 'Goodman triangle'. But better to just keep it simple.

In my home, my wife is the owner, primary bene and payor from a joint account. I may change that to equally or the survivor.

Keep asking questions.

 

[somarco]

The manager telling me to do one thing but doesn’t explain why.

Perhaps because he/she doesn't know the answer.

Look at your app. Is there a place to designate the owner if someone other than the insured? Is there a place for the OWNER to sign, in addition to the INSURED?

If so, no problem. Regardless of what your manager says.

I can’t understand why payor would not be the owner

The payor can be anyone. Sometimes carriers get their panties in a wad is when a business or trust is the payor. But those usually have a work around.

But the payor is not AUTOMATICALLY the owner. Or the beneficiary.

Owner, payor, beneficiary are rudimentary terms in life insurance. How long have you been in the business? Are you captive?

 

[theleadingagent]

Well in 3 situations the parents adult kids live in another state.

1 situation is for whole life
2 other situations is for term life

When inquiring about term with Mutual of Omaha, A customer service rep said the app could be completed if the owner of policy is in same state as writing agent. Otherwise writing agent would have to either have license in the state of the insured (to obtain remote signature) or the insured would have to be in the state of the writing agent in order to sign the app.

So far the term app I wrote for a parent who wanted to buy for their adult child, the parent was payor and beneficiary but not the owner because that’s what manager said to do.

 

[theleadingagent]

Perhaps because he/she doesn't know the answer.

Look at your app. Is there a place to designate the owner if someone other than the insured? Is there a place for the OWNER to sign, in addition to the INSURED?

If so, no problem. Regardless of what your manager says.



The payor can be anyone. Sometimes carriers get their panties in a wad is when a business or trust is the payor. But those usually have a work around.

But the payor is not AUTOMATICALLY the owner. Or the beneficiary.

Owner, payor, beneficiary are rudimentary terms in life insurance. How long have you been in the business? Are you captive?

I guess what I meant was if say for example IM paying a policy (especially for term) then I’m going to want to be owner so I can have control cause well....I’m paying!

I know these terms are rudimentary - to an extent - but it does seem as though there are scenarios that can make it more complex

I’ve been doing this for a few months so I’m not quite as experienced with certain aspects yet.

 

[somarco]

I guess what I meant was if say for example IM paying a policy (especially for term) then I’m going to want to be owner

Doesn't make any difference if term, WL, UL, SP, etc.

Unless the owner is designated separately on the app, the applicant IS the owner.

Different reasons for naming someone OTHER THAN the applicant as owner. Such as:
Business life insurance
Estate planning
Part of divorce decree

Probably others, those are just the ones that come to mind right now

I know these terms are rudimentary - to an extent - but it does seem as though there are scenarios that can make it more complex

I’ve been doing this for a few months so I’m not quite as experienced with certain aspects yet.

I have not been through pre-liscensing in a long time. I believe the requirements in GA are 40 hours classroom time. Seems to me owner, premium payor, applicant and beneficiary would be covered during pre-licensing. And presumably by your agency sales trainer.

Carriers get nosy when the beneficiary doesn't have an insurable interest but the rest of the scenario's are usually no big deal.

 

[pfg1]

So far the term app I wrote for a parent who wanted to buy for their adult child, the parent was payor and beneficiary but not the owner because that’s what manager said to do.

If they are paying for it and want to be the beneficiary, they should be the owner. If they aren't the owner, they have zero control. Technically it can be done the way you said, but its bad advice, imo.

 

[Newby]

I guess what I meant was if say for example IM paying a policy (especially for term) then I’m going to want to be owner so I can have control cause well....I’m paying!

I know these terms are rudimentary - to an extent - but it does seem as though there are scenarios that can make it more complex

I’ve been doing this for a few months so I’m not quite as experienced with certain aspects yet.

Most of the time the person paying the premium will want to be the owner of the policy. But there can be situations where they won't want to. Like if they are on Medicaid then the cash value would count as a resource and disqualify them for their Medicaid benefits at some point.

But I just had a sad call from someone I sold a $50,000 GUL to about 10 years ago. She was the insured and payer but she wanted her adult daughter to be the owner and beneficiary because some "friend" had told her to do that. This lady had no real reason to do that but advice from "friends" sometimes is impossible to fight against.

So now after 10-years the lady calls me and wanted to know what happens to her policy if her daughter (the owner) borrowed money from it. I told her that the "G" in her GUL goes bye-bye and her policy will be worthless within a few months. That's what she remembered me telling them when they bought it. But the daughter screwed up and took out what little cash it had in it. So she took out $1,100 from the policy and crashed the $50,000 guaranteed policy that SHE was the benny on and mom had paid all the premiums on.

So always think these ownership things through and make sure the key people understand what it all means.