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A. Third-Party Ownership

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Key Takeaways
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Most insurance policies are written so that the insured and the owner of the policy are one and the same person. There are, however, situations in which a policy is owned by someone other than the insured — an arrangement known as third-party ownership. A third-party owner is a legal term for an individual or entity that is not the insured under the contract, but that nevertheless holds a legally enforceable right under it. Most third-party-owned policies are found in business situations, or in policies written on the life of a minor, where a parent owns the policy.


Key Takeaways
  • Third-party ownership exists when the policy owner and the insured are different people or entities
  • A third-party owner has no insurable interest requirement toward being the insured, but does hold a legally enforceable right in the contract
  • Most third-party-owned policies arise in business arrangements, or when a parent owns a policy on a minor child