New Jersey Life Insurance Exam Practice Question
An owner of a life insurance policy may transfer ownership temporarily with
Correct Answer: A
Rationale: A collateral assignment allows the policy owner to temporarily transfer ownership rights to a lender as security for a loan, while retaining the right to reclaim ownership once the debt is settled.
A beneficiary assignment (B) designates who will receive the policy's benefits upon the owner's death but does not transfer ownership. An absolute assignment (C) permanently transfers ownership rights to another party, which is not temporary. A transfer assignment (D) is not a recognized term in life insurance, making it an incorrect option. Thus, collateral assignment is the only choice that facilitates a temporary transfer of ownership.
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