New York Child Abuse Identification and Reporting Practice Exam

Which of the following is NOT considered an ownership right in an insurance policy?

1. Changing beneficiaries at will

2. Switching the policy from one insured to another

3. Borrowing against the policy's cash value

4. Canceling the policy anytime

The correct answer is: Switching the policy from one insured to another

The option related to switching the policy from one insured to another is not considered an ownership right in an insurance policy. Ownership rights typically allow the policyholder specific controls and privileges over the policy itself, such as making changes to beneficiaries, borrowing against the cash value, and canceling the policy at any time. Changing beneficiaries is an important right because it allows the policyholder to designate who will receive the insurance payout upon their death. Borrowing against the policy's cash value utilizes the asset built up within a whole life or endowment policy, providing a financial resource to the policyholder. The ability to cancel the policy reflects the policyholder's control and decision-making authority over the insurance coverage they maintain. Conversely, switching a policy from one insured to another often involves nuances that go beyond simple ownership rights and may require the insurer’s approval or may not be permissible depending on the terms of the policy. This action usually reflects a transfer of risk rather than a direct ownership right that the policyholder possesses.