No. Being the life assured does not automatically give a person ownership of the insurance policy. Where the policy owner and the life assured are different persons, ownership of the policy remains with the policy owner and forms part of the policy owner's estate upon death.
If the policy is not specifically mentioned in the Will, it will generally form part of the residuary estate. The executor will then administer the policy in accordance with the terms of the Will and the applicable estate laws.
The eventual treatment of the policy may depend on factors such as:
- Whether the policy is subject to a trust arrangement;
- The insurer's terms and conditions;
- Whether the policy allows assignment or transfer of ownership; and
- The specific circumstances of the estate and beneficiaries.
Example:
If a parent owns an insurance policy on a child and passes away without specifically mentioning the policy in the Will, the policy will generally form part of the parent's estate. The executor may continue administering the policy and, where appropriate and permitted by the insurer, arrange for the policy to be assigned to the child when he or she reaches the age of 21.
Important Consideration: Premium Payments
Until the policy is transferred or otherwise dealt with, premiums generally remain payable unless there is a premium waiver feature under the policy. It is therefore important to ensure that sufficient funds are available for ongoing premium payments so that the policy remains in force and does not lapse.
Note: If you wish the policy to be transferred to a specific person or want to ensure there are funds available to continue paying the premiums, it is advisable to address the policy specifically in your Will. This helps avoid uncertainty and ensures your intentions can be carried out more smoothly.