There is a difference between the insured and the policy owner, although the owner and the insured are often the same person. For example, if Joe buys a policy on his own life, is both the owner and the insured. But if Jane, his wife, buys a policy on Joe's life, which is the owner and he is the insured. The policy owner is the guarantee and he will be the one to pay for the policy. The insured is a participant in the contract, but not necessarily a part of it. Also, most companies allow the debtor and owner to be different, and. g. a grandparent pay premiums for a policy on a child, owned by a grandchild.
The beneficiary receives policy proceeds upon the death of the insured person. The owner designates the beneficiary, but the beneficiary is not party politics. The owner can change the beneficiary unless the policy has an irrevocable beneficiary designation. If a policy has an irrevocable beneficiary, any beneficiary changes, policy assignments, or cash value interest will require the agreement of the original recipient.
In case the policy owner is not the insured(CVI), insurance companies have sought to limit policy purchases to those with an insurable interest in the CVI. For life insurance policies, close family members and business partners will usually be found to have an insurable interest. The insurable interest requirement usually demonstrates that the purchaser actually suffer some kind of loss if the CVI dies. This requirement prevents people from benefiting from the purchase of purely speculative policies on people they expect to die. Without insurable interest requirement, the risk that a buyer could kill CVI insurance benefits would be great. In at least one case, an insurance company which sold a policy to a purchaser who has no insurable interest (who later murdered the CVI of revenues), was found liable in court for contributing to the wrongful death of victim (Liberty National Life v. Weldon, Ala.171 267 (1957)).
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