Primerica Life Producer Practice Test

Which action is not permitted for the policyowner in the ownership provision?

1. Set premium rates

2. Change beneficiaries

3. Alter coverage amounts

4. Transfer policy ownership

The correct answer is: Set premium rates

The ownership provision of an insurance policy typically grants the policyowner a range of rights and privileges regarding management of the policy. Among these rights, the policyowner can change beneficiaries, alter coverage amounts, and transfer policy ownership. However, setting premium rates is not a right usually granted to the policyowner. This is primarily because premium rates are determined at the underwriting stage based on various factors such as the insured's age, health, and risk factors, as well as the insurance company's pricing strategy and regulations. Therefore, once the policy is issued, the premium amounts are fixed for the selected term or until the next renewal, ensuring the insurance company's financial viability and compliance with regulatory standards. Since the policyowner does not have influence over the underwriting process or premium calculations, they cannot set or change the premium rates at their discretion.