Arkansas Life and Health Insurance Practice Exam

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Prepare for the Arkansas Life and Health Insurance Exam. Utilize flashcards and multiple-choice questions with hints and explanations for each question. Get thoroughly ready for your certification test!

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Practice this question and more.

Which of the following is NOT an example of an absolute assignment?

Assigning a policy to a trust
Naming a new beneficiary
Transferring ownership to another individual
Using a Life Insurance policy as collateral for a loan

The correct answer is: Assigning a policy to a trust

Assigning a policy to a trust is not an example of an absolute assignment because it does not fully transfer ownership of the policy. The policy still remains in the control of the insured and can be changed or revoked at any time. Naming a new beneficiary is an example of an absolute assignment because it completely transfers the rights and ownership of the policy to the named beneficiary. Transferring ownership to another individual is also an example of an absolute assignment because it fully transfers all rights and ownership of the policy to the other individual. Using a Life Insurance policy as collateral for a loan is also an example of an absolute assignment because it fully transfers ownership and rights to the lender for the duration of the loan.