Rhode Island Life Insurance Practice Exam

A Whole Life insurance policyowner does NOT have the right to?

1. Change beneficiaries

2. Change the grace period

3. Take a policy loan

4. Withdraw cash value

The correct answer is: Change the grace period

The correct answer is based on the fundamental characteristics of Whole Life insurance policies. The policyowner has certain rights, including the ability to change beneficiaries, take policy loans, and withdraw cash value. However, the grace period is a specific contractual provision established by the insurer that allows for a specified period to make premium payments after a due date without the policy lapsing. The grace period is set by the insurance company and cannot be altered by the policyowner. It serves to protect the policy from lapsing due to missed payments. On the other hand, changing beneficiaries, policy loans, and cash value withdrawals are all rights that policyowners typically have under a Whole Life insurance policy, offering flexibility and access to funds as needed within the framework of the policy terms. This distinction emphasizes the policyowner's control over aspects of the policy while recognizing the insurer's set terms regarding the grace period.