In the 41 common law states of the United States, which statement is true about ownership in a life insurance policy?

• A. The policyowner's marital status generally has no direct or automatic effect on the ownership interests in a life insurance policy.
• B. Property acquired with funds of both spouses will be community property.
• C. Both spouses generally must agree in writing to any transactions involving asset transfers.
• D. Purchases made by their residents while visiting in community property states will become community property.

Answer: (A)

Ownership rights in a life insurance policy come from the policyowner designation and the contract terms, not from the policyholder’s marital status in common law states. The policyowner controls who holds ownership, can name or change beneficiaries, assign the policy, borrow against cash value, or surrender the policy. Marital status doesn’t automatically grant or transfer ownership just because someone is married. The other statements blend property rules that apply in different contexts (such as community property states) and aren’t automatic rules for ownership in common law states. For example, whether property acquired during marriage is treated as community property depends on the state’s regime, and consent requirements or how purchases are treated in community property states don’t automatically apply to ownership of a life insurance policy in the 41 common law states.