Rhode Island Life Insurance Practice Exam

What right does a Whole Life insurance policyowner NOT possess?

1. Change the beneficiary

2. Change the grace period

3. Borrow against the cash value

4. Reduce the premium payment

The correct answer is: Change the grace period

A Whole Life insurance policy grants the policyowner several rights that enhance their control over the policy. Among these rights, the ability to change the beneficiary is a significant feature, allowing the policyowner to designate who will receive the death benefit in the event of the insured's passing. Additionally, the policyowner can borrow against the cash value, enabling them to access funds without surrendering the policy. This borrowing option is particularly valuable as it usually does not require a credit check and has favorable repayment terms. The grace period is a specific timeframe that allows the policyowner to make premium payments without causing policy lapse. This period is typically defined in the policy and cannot be altered by the policyowner. Thus, the right to change the grace period is not a control feature available to the policyowner in a Whole Life policy, which is why this option is correct. The duration of the grace period is established by the insurance company and is part of the policy’s terms and conditions. In summary, while the policyowner has the flexibility to manage beneficiaries, access cash value through loans, and make premium adjustments under certain conditions, they do not have the right to alter the grace period as it is set by the insurer.