New York Insurance Exam Practice Question
What is the purpose of a policy's assignment clause?
Correct Answer: B
Rationale: The assignment clause in a policy primarily serves to transfer policy rights to another party, allowing the policyholder to assign benefits or ownership to someone else, such as a beneficiary or lender.
Option A is incorrect because the assignment clause does not cancel the policy; it facilitates the transfer of rights. Option C is also wrong, as waiving premiums is not a function of the assignment clause, which deals with rights rather than payment obligations. Lastly, Option D misrepresents the clause’s purpose; it does not increase the death benefit but rather governs the rights associated with the policy.
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