PSI Ohio Insurance Practice Exam

What is true regarding the owner's rights when an irrevocable beneficiary is designated?

1. The owner cannot make any changes to the policy

2. The owner retains the right to make premium payments

3. The owner can change the beneficiary at any time

4. The owner has full control of the policy's cash value

The correct answer is: The owner retains the right to make premium payments

When an irrevocable beneficiary is designated on an insurance policy, the rightful ownership rights of the policy owner change significantly. The designation of an irrevocable beneficiary means that the policy owner cannot change the beneficiary without the consent of that beneficiary. This is a critical aspect, as it ensures that the benefits of the policy will go to the designated beneficiary, providing them with a guaranteed interest in the policy. Despite this restriction on changing the beneficiary, the policy owner still retains certain rights. One of those rights is the ability to make premium payments. Premium payments are essential for keeping the policy in force, and the owner can continue to make these payments regardless of the irrevocability of the beneficiary designation. This ability allows the policy owner to maintain control over the financial aspects of the policy, ensuring that it remains active and that the benefits can eventually be disbursed to the irrevocable beneficiary. The other options imply restrictions that do not apply to the owner's ability to make premium payments. For instance, while the owner cannot change the irrevocable beneficiary without consent, this does not preclude them from fulfilling their obligation to pay premiums on the policy. Similarly, full control over the policy's cash value is not present with an irrevocable beneficiary, as any withdrawal or changes could