Chart of a life insurance

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, he is both the owner and the insured. but if jane, his wife, buys a policy on joes life, she is the owner and he is the insured. the policy owner is the guarantor and he will be the person to pay for the policy. the insured is a participant in the contract, but not necessarily a party to it. also, most companies allow the payer and owner to be different, e. g. a grandparent paying premiums for a policy on a child, owned by a grandchild. 

the beneficiary receives policy proceeds upon the insured persons death. the owner designates the beneficiary, but the beneficiary is not a party to the policy. 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 borrowing would require the agreement of the original beneficiary. 

in cases where the policy owner is not the insured ( also referred to as the celui qui vit or cqv ), insurance companies have sought to limit policy purchases to those with an insurable interest in the cqv. 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 will actually suffer some kind of loss if the cqv dies. such a requirement prevents people from benefiting from the purchase of purely speculative policies on people they expect to die. with no insurable interest requirement, the risk that a purchaser would murder the cqv for insurance proceeds would be great. in at least one case, an insurance company which sold a policy to a purchaser with no insurable interest ( who later murdered the cqv for the proceeds ), was found liable in court for contributing to the wrongful death of the victim ( liberty national life v. weldon, 267 ala. 171 ( 1957 ) ).