Tennessee Insurance Practice Exam

In a life insurance policy, which provision states who may select policy options and name a beneficiary?

1. Insured's rights

2. Beneficiary rights

3. Owner's rights

4. Policyholder's rights

The correct answer is: Owner's rights

The correct choice highlights the importance of ownership in a life insurance policy. The provision that states who may select policy options and name a beneficiary is typically referred to as the owner's rights. This is because the individual who owns the policy has the legal authority to make decisions regarding the policy, including who will receive the death benefit (the beneficiary) and what options may be exercised within the policy itself, such as changing coverage or adjusting premiums. Understanding this provision is crucial because it emphasizes the role of the policy owner in the insurance contract. The owner can be different from the insured individual, which is a common scenario in life insurance policies. For example, a parent may purchase a policy on a child's life, making themselves the owner while the child is the insured. While terms like insured's rights, beneficiary rights, and policyholder's rights might seem relevant, they do not accurately capture the full scope of decision-making authority in terms of selecting options and naming beneficiaries; those are specifically defined under the owner's rights provision. This understanding is essential for comprehending the dynamics of life insurance policies and the rights conferred to policy owners.