A Guide to the Legal implications of Assignment and Joint ownership of a life policy issued by Old Mutual International.
What is the effect of assigning a policy?
When completing an Assignment form, a policy holder is transferring ownership of his policy to the person(s) specified as the assignee(s). Upon satisfactory completion of this form, this assignee will hold the policy as legal and beneficial owner, as if he himself had made the original policy application. The assignor will no longer have any rights over the policy. The only way those rights can be recovered is upon re-assignment of the policy from the new owner back to the original assignor.
What form should be used?
Old Mutual International has various assignment forms and you should ensure you and your adviser are completing the correct one: if you are the sole owner of a policy and you wish to assign it to another individual please complete the form "Single Ownership to Single Ownership"; if you are one of two policy owners and you wish to assign it to an individual please complete the form "Joint Ownership to Single Ownership"; if you are the sole owner of a policy and you wish to assign into joint names please complete the form "Single Ownership to Joint Ownership".
Remember, if you are a sole owner and you wish to incorporate another owner on the policy whilst retaining your own rights of ownership (using of course, the form applicable to transfers from single to joint ownership) you must include yourself as one of the assignees.
You should note that such transactions will not affect the identity of the life or lives assured under the policy. Once specified at commencement, these details cannot be changed.
If this is not how you envisage the transaction you are entering into, you should contact your financial adviser.
What are the legal implications of joint ownership?
If a policy is held in joint names, each of the owners so named have rights to the entire policy - neither owns any part of it to the exclusion of the other. If either policy holder then dies during the life of the policy, the remaining policy holder automatically owns the rights to the policy exclusively. Hence, the policy or its proceeds will not form part of the deceased's estate.*
If the deceased was also the sole life assured, the policy will come to an end, and the survivor will be entitled to the policy proceeds. If the policy was taken out with two lives assured specified, the policy will not come to an end until the death of the second person so specified.