Can You Transfer Ownership Of A Life Insurance Policy? 
As with any asset , ownership of a life insurance policy can be transferred to a new owner either by gift or by sale -LRB- or , in rare cases where the parties are less than careful , a transaction that is deemed part gift & part sale . -RRB- However , there are potential tax consequences which are important to keep in mind . Probably the most important tax trap is making a `` Transfer for Value '' of a life insurance policy . If a policy is sold , either for cash or in exchange for some other valuable consideration , the policy death benefit will fully taxable to the beneficiary unless the transfer qualifies for certain exceptions . The financial cost of having what was intended to be a tax-free death benefit become fully taxable is so high , it is imperative to check with a qualified professional before executing a policy transfer . Other tax implications include potential gift tax on the fair market value of the policy if the transfer is by gift , potential income tax on deferred gains in the policy if the transfer is by sale , and potential income tax on the fair market value of the policy if the transfer is from an employer to an employee . 