Definition of "Incidents of Ownership"

A policyowner's rights under a life insurance policy, including the right to change the beneficiary and the right to surrender the policy for the cash value.

In life insurance, the right to exercise any of the privileges of policy ownership, including the right to change beneficiaries, withdraw cash values, take policy loans, make assignment, etc.) Incidents of ownership can be major estate planning factors for policy owners who wish to transfer policy ownership from themselves to another person or a trust, thereby removing the policies from their estates. If any incidents of ownership remain with the original owner, policy proceeds may be included in the person's estate at death.