All of the following are examples of third-party ownership EXCEPT

Rationale

Primary beneficiary is not an example of third-party ownership.

In insurance, third-party ownership refers to situations where someone other than the insured owns the policy. A primary beneficiary, however, is the individual designated to receive the policy's benefits upon the insured's death and does not own the policy itself.

A (Key Person insurance.) YOUR ANSWER

Key Person insurance is a policy taken out by a business on the life of a key employee, with the business as the owner and beneficiary. This arrangement exemplifies third-party ownership, as the business is not the insured but holds the policy to protect its interests.

B (Collateral assignment.) YOUR ANSWER

Collateral assignment involves assigning a life insurance policy to a lender as collateral for a loan. In this case, the lender has an interest in the policy, making it an example of third-party ownership where the lender is not the policyholder but has rights to the policy’s benefits.

C (Primary beneficiary.) CORRECT

A primary beneficiary is the individual who will receive the proceeds from the insurance policy upon the insured's death. This role does not involve ownership of the policy itself, as the beneficiary is simply a recipient of the benefits, distinguishing it from third-party ownership examples.

D (Juvenile policies.) YOUR ANSWER

Juvenile policies are life insurance policies taken out on the lives of minors, typically owned by a parent or guardian. In this case, the parent or guardian holds the policy, making it another instance of third-party ownership since the insured (the minor) is not the owner.

Conclusion

Third-party ownership in insurance is characterized by ownership of a policy by someone other than the insured individual. Among the options presented, primary beneficiary stands out as it represents a role focused on receiving benefits rather than ownership of the policy itself. By contrasting it with examples like Key Person insurance and juvenile policies, the distinction becomes clear, highlighting the unique nature of ownership in insurance contracts.

All of the following are examples of third-party ownership EXCEPT

Primary beneficiary is not an example of third-party ownership.

Related Questions

Related Quizzes

How familiar were you with this question?

Report an Issue

Rate this Practice Test