When there is dissociation from ownership rights in a life insurance policy, the insured always has the right to do which of the following?

• A. I only
• B. II only
• C. Both I and II
• D. Neither I nor II

Answer: (D)

When ownership and the insured are not the same person, ownership controls the policy. The policyowner has the power to name or change beneficiaries, borrow against cash value, surrender or lapse the policy, and assign ownership. The insured does not automatically keep these ownership-based powers. Therefore, any rights that depend on being the owner aren’t guaranteed to the insured in a situation of dissociation. Only if the insured is also the owner, or if the owner has explicitly granted a particular right to the insured (or if a designated beneficiary is irrevocable, which limits changes), would those actions be possible. Absent those conditions, neither of the described rights would necessarily be available to the insured, so the correct conclusion is that neither right can be assumed.