California Life and Health Insurance Practice Exam

Which of the following rights is NOT typically held by a policyowner?

1. Change beneficiary

2. Change premium payment method

3. Change the dividend schedule

4. Change the insured amount

The correct answer is: Change the dividend schedule

The correct answer points to the fact that changing the dividend schedule is typically not a right held by the policyowner. In life insurance, the dividend schedule is determined by the insurer and is part of the policy's terms. Policyowners usually have the ability to dictate how dividends are used (e.g., taking them in cash, using them to reduce premiums, or applying them toward paid-up additions), but they generally cannot change the schedule itself, which is defined by the insurance company’s policies and financial performance. In contrast, policyowners typically possess the rights to change the beneficiary, which allows them to name who will receive the death benefit, and to change the premium payment method, enabling them to manage how they pay premiums to suit their financial situation. Additionally, policyowners can often change the insured amount, provided it falls within the limits and terms outlined in the policy. These rights give them flexibility and control over their insurance coverage, while the dividend schedule is an aspect that remains under the insurer's authority.