Life Policy with Contractor Other than the Insured, how does it work?
The life insurance policies are complex instruments also allow interlocking operations where contractor, insured and beneficiary are different.
In today’s guide I am talking about this eventuality, that is the life insurance policy in the event that the insured person is different from the policyholder. This is a case that is not of school, but very frequent, and that you could then use to protect those close to you.
Who is the policyholder of a life insurance policy?
The figures who can be involved (and often coincide) in a life policy are essentially three, as anticipated: the policyholder, the insured and the beneficiary.
The policyholder is the so-called zero figure, i.e. the one who merely pays the premiums that are provided for in the insurance contract. In the event that the policyholder does not coincide with the insured, the only role played by the policyholder is precisely that of paying the premium.
There have been very famous cases of policyholders and beneficiaries who were not even aware of the stipulation of the policy: absurd as it may seem, it is actually possible and it is a possibility offered by many companies.
The figure of the insured
The insured is instead the subject who is insured against death, or the subject whose death event will trigger the provisions of the policies.
The person in question is also the one taken for the actuarial calculation, or to calculate the premium and any capital recognized in the event of death.
The beneficiary may not coincide with the insured or the policyholder for obvious reasons: what good would it be to choose a life policy where the insured (dead) is also a beneficiary?
Beneficiaries other than the insured are generally chosen for this very reason and this is the most common case of stipulations.
Tax issues: when the policyholder is different from the insured
This distinction is particularly important in the event that we want to take advantage of the tax deductions of the premiums paid.
The tax deductions are in fact possible only if:
- If the policyholder and the insured are the same;
- If the insured is a dependent family member of the policyholder;
- If both the policyholder and the insured are a dependent family member of the person requesting the deduction;
- If the policyholder is a dependent family member and instead the insured is the person requesting the deduction;
These are the 4 cases that our code provides as valid for the tax deduction of the premium and which are one of the most important aspects of the story I am dealing with today.
Here you can learn more, reading my guide dedicated to this topic.
What happens if the policyholder dies?
The policyholder is also a very common mortal and could therefore fail before the policyholder or in any case before the contract is terminated. In this case the contract is transferred to the legitimate heirs, or to the testamentary heirs.
In this case, the heirs can then appoint a new policyholder, or trigger the redemption of the policy. Depending on the convenience, you can go and choose one or the other option without any kind of problem.
Is it better to have a policyholder other than the insured?
This is a complex issue and one that you should obviously evaluate firsthand, taking into account your needs and the economic and family relationships to which you are subject.
That of the policyholder other than the insured is an eventuality already foreseen by the code and by the most common insurance contracts, and in case you find this option as ideal for your situation, do not hesitate to take out a policy of this type.
There are no major disadvantages, except for the deductibility in the event that the insured person is not the responsibility of the policyholder.