Transfer insurance policy to my sister ?

[Deepsea]

I have a $1,000,000 10 pay from Mass, and my circumstances have changed.
Got divorced etc. The policy is on my life, and I have borrowed almost all the cash value out of the policy.
In the 7th year of the policy and have not received more than the basis so there would be no taxable event is I surrendered the policy.

My question is current cash value is around $4000. Would I be able to give the policy to my sister as the new owner ? I figure the value is only $4000, but she could pay back the loan and get a much better interest rate going forward than other fixed interest investments. Also she would be the owner and beneficiary and I would be the contingent owner. Would that work ? Would the insurance company let me transfer the policy on my life to my sister ? My sister would then be the owner on my policy.

thanks

 

[fed up]

Call the company and ask about transferring ownership. They may need to see an insurable interest. Of course she could take over the payments and repay the loans without any transfer, you would just need to make sure you don't tap the policy again

 

[fed up]

Often times it gets down to "Why". Why would your sister 'own' an insurance policy on you? What would the financial impact be on her life when you die? A lot of the rules changed after Larry King sold his life policies to an investor group. Much of life insurance has to do with the policies which don't pay out. An investor group would not let a policy lapse because they want the Death Benefit as a payoff on their investment. Any policy which does not pay out a death benefit is profit for the company. What works for one company may not be permitted by another. It will not hurt you to ask the company what rules they have about transferring ownership. If it is permitted you get the paperwork and get it done. If it is not permitted you will have to find an avenue to accomplish what you want to accomplish

 

[fed up]

Often times it gets down to "Why". Why would your sister 'own' an insurance policy on you? What would the financial impact be on her life when you die? A lot of the rules changed after Larry King sold his life policies to an investor group. Much of life insurance has to do with the policies which don't pay out. An investor group would not let a policy lapse because they want the Death Benefit as a payoff on their investment. Any policy which does not pay out a death benefit is profit for the company. What works for one company may not be permitted by another. It will not hurt you to ask the company what rules they have about transferring ownership. If it is permitted you get the paperwork and get it done. If it is not permitted you will have to find an avenue to accomplish what you want to accomplish

 

[rousemark]

You are the owner of the policy.. There is no reason why you cannot assign ownership to your sister. Companies can put restrictions on the ownership and beneficiary before issue but once it is in force, they cannot restrict the assignment of the policy unless it would create a violation of state law.

 

[Todd King]

She’s my sister why couldn’t I gift her the policies ?
Only $4000 of cash value

First off, are you still paying on the policy? If not, the cash values will be eaten up over time. So, the only way she's going to get that $4000 is if you (or somebody) is still paying the premiums, or cash it in.

 

[Life Hawk]

I have a $1,000,000 10 pay from Mass, and my circumstances have changed.
Got divorced etc. The policy is on my life, and I have borrowed almost all the cash value out of the policy.
In the 7th year of the policy and have not received more than the basis so there would be no taxable event is I surrendered the policy.

My question is current cash value is around $4000. Would I be able to give the policy to my sister as the new owner ? I figure the value is only $4000, but she could pay back the loan and get a much better interest rate going forward than other fixed interest investments. Also she would be the owner and beneficiary and I would be the contingent owner. Would that work ? Would the insurance company let me transfer the policy on my life to my sister ? My sister would then be the owner on my policy.

thanks

More info needed... much more. Divorce settlements invite the court's in and they may have a differing opinions to your thoughts. Whole bunch of why's here, not to mention age questions, debt cost, interest questions, and funding questions.

You need to sit down with someone, not me, but an agent you trust to go over options and take a look at a much larger picture. Oh yeah, one of the most important questions, "Will your health be a deciding factor?"

The forum is a great place to get information to follow up on and research more on... but to pop on here with a question like that and make a decision based on answers provided with no follow up is a fools errand.

 

[rousemark]

More info needed... much more. Divorce settlements invite the court's in and they may have a differing opinions to your thoughts. Whole bunch of why's here, not to mention age questions, debt cost, interest questions, and funding questions.

You need to sit down with someone, not me, but an agent you trust to go over options and take a look at a much larger picture. Oh yeah, one of the most important questions, "Will your health be a deciding factor?"

The forum is a great place to get information to follow up on and research more on... but to pop on here with a question like that and make a decision based on answers provided with no follow up is a fools errand.

Should sit down with Agent that wrote the policy. That is they get paid for.. To service the business.
I

 

[Life Hawk]

Should sit down with Agent that wrote the policy. That is they get paid for.. To service the business.
I

Agreed! Strang that someone with that type of plan would come here for the question. I mean if you can pay for a 1M 10 year paid up plan... what possess you to find your answers here???

Don't get me wrong... love you guys, but that sort of $ needs a face to face sit down.

Something funny there all around.

 

[Allen Trent]

borrowed almost all the cash value out of the policy.
In the 7th year of the policy and have not received more than the basis so there would be no taxable event is I surrendered the policy.

You may be wrong about this & you should dig deeper. If you surrender or even merely let it lapse, you might get a tax bill for gains you don't realize you have. When you have taken loans, your taxable gain calculation isn't merely adding up what you have paid in & comparing to how much you took out/borrowed. The interest charged also counts against you in the calculation. So, if you paid in 200k but borrowed 160k, you might think there is no gain. But if the loan balance is now 210k due to interest charges, you could have a 1099 for a gain.

Could possibly avoid that be electing a reduced paid up policy if allowed, etc. Call your agent or carrier to get more information