Ownership change refers to the transfer of legal ownership of a life insurance policy from one person or entity to another. This can occur through gift, sale, business restructuring, divorce settlements, or estate planning strategies. When ownership changes, the new policyowner gains control over premium payments, beneficiary designations, policy loans, and other rights, while the insured person remains the same. Ownership changes may trigger important tax consequences, such as potential gift tax on the policy's value, transfer-for-value concerns, or inclusion of death benefits in a different estate. Proper documentation via carrier forms and, where appropriate, collateral assignments or trust agreements is essential to ensure that legal and tax outcomes match planning intentions.

In everyday advisory work, ownership change is common when policies move into irrevocable life insurance trusts, are transferred between spouses, or shift from individual to business ownership in buy-sell planning. Advisors help clients complete ownership change forms accurately, coordinate with attorneys on trust language, and review beneficiary designations to avoid conflicts or unintended disinheritance. They also consider transfer-for-value rules when policies are sold or exchanged for consideration, since improper handling can jeopardize the income tax-free nature of death benefits. In corporate contexts, ownership change may occur when a business is sold, merged, or restructured, requiring careful review of existing key person or buy-sell coverage. Advisors maintain clear records of effective dates and confirm that premium payments and reporting align with the new owner. By understanding ownership change implications, producers ensure that control of policies supports broader estate, business, and tax planning goals while preserving the intended tax advantages of life insurance.