CARD Q001
Nora owns and pays for a policy on her brother. Their mother is the beneficiary. Who normally exercises the policy’s ownership rights?
- Her brother, because his life is insured
- Their mother, because she receives the proceeds
- Nora
- Nora and her brother jointly, because both must approve changes
Nora
The policyowner controls the contract, subject to policy terms and any irrevocable beneficiary or assignment rights. The insured and beneficiary can be different people.
Why each choice is right or wrong
A. Her brother, because his life is insured
Incorrect. Being the insured identifies whose life is covered, not who owns the contract.
B. Their mother, because she receives the proceeds
Incorrect. A beneficiary receives eligible proceeds but does not automatically control ownership rights.
C. Nora
Correct. The policyowner controls the contract, subject to policy terms and any irrevocable beneficiary or assignment rights. The insured and beneficiary can be different people.
D. Nora and her brother jointly, because both must approve changes
Incorrect. The facts name Nora as owner; joint control does not follow simply from insuring her brother.
Review the related terms
Use these lessons to revisit the concepts and try additional practice questions.