Which term describes ownership of a life insurance policy by someone other than the insured, used in estate planning and business?

• A. Joint ownership
• B. Beneficiary ownership
• C. Third-party ownership
• D. Trust ownership

Answer: (C)

Ownership by someone other than the insured is described as third-party ownership. This setup lets a policy be owned by a business, a trust, or another individual who is not the person whose life is insured. The owner controls the policy—premium payments, any loans or withdrawals against cash value, and who will receive the death benefit through the named beneficiary. This arrangement is especially useful in estate planning and business: it provides liquidity to pay estate taxes or to fund buy-sell agreements, and it helps finalize wealth transfers or ensure business continuity without tying the insured’s personal finances to the policy.

Joint ownership means two people share ownership, which isn’t what the question describes. Beneficiary ownership isn’t a standard term for who actually owns a policy, and trust ownership is a specific form of ownership that can be used within third-party ownership. The broad concept of third-party ownership encompasses these arrangements, making it the best fit.