California Life and Health Insurance Practice Exam

Who typically holds the legal title to a life insurance policy?

1. The insurer

2. The insured

3. The policyholder

4. The beneficiary

The correct answer is: The policyholder

The policyholder typically holds the legal title to a life insurance policy. This means that the individual or entity that purchases the policy has control over it and possesses the rights associated with it, such as the ability to change beneficiaries, surrender the policy, or take out loans against it. The policyholder is responsible for paying the premiums and has the authority to make decisions regarding the policy's terms and conditions. The other roles, while important, do not hold the legal title. The insurer is the company providing the coverage and assumes the risk, the insured is the person whose life is covered by the policy but does not own it unless they are also the policyholder, and the beneficiary is the individual or entity designated to receive the death benefit upon the insured's passing. While beneficiaries have rights under the policy, they do not own the policy itself.