Oklahoma Life Producer Practice Exam

To whom does the cash value of a life insurance policy belong?

1. Beneficiary

2. Insured

3. Policy Owner

4. Insurance Company

The correct answer is: Policy Owner

The cash value of a life insurance policy belongs to the policy owner. This means that if an individual holds a life insurance policy, they are entitled to the cash value that accumulates within that policy over time. The cash value can be accessed through loans, withdrawals, or surrendering the policy, providing the policy owner with options for leveraging the accumulated value. The distinction here is important as the policy owner may not necessarily be the insured individual. For instance, a parent may purchase a life insurance policy on their child, making them the policy owner; however, the child would be the insured. In such cases, the policy owner retains control over the cash value and any benefits associated with it. The beneficiary, while entitled to the death benefit upon the death of the insured, does not have rights to the cash value unless they also happen to be the policy owner. The insurance company does not own the cash value; they are merely the issuer of the policy. Thus, the correct understanding revolves around the idea that the policy owner has both rights and responsibilities related to the cash value, distinguishing it from the roles of both the insured and the beneficiary.