Utah Life Producer Practice Exam

Who is considered a third-party owner of an insurance policy?

1. An individual who is the insured

2. A policyowner who is not the insured

3. An agent representing the insured

4. A family member of the insured

The correct answer is: A policyowner who is not the insured

A third-party owner of an insurance policy is defined as a policyowner who is not the insured individual. This means that the person who holds the policy and pays the premiums is different from the person whose life is insured. This situation is quite common; for example, parents may purchase life insurance policies for their children, making them the policy owners while the children are the insured parties. In contrast, the other options refer to various relationships with the policy but do not fit the definition of a third-party owner. Individuals who are insured themselves do not qualify as third-party owners since they are the ones protected by the policy. An agent representing the insured acts on behalf of the insured, often advising or facilitating the purchase of the policy, but does not own the policy themselves. Family members, while often having an interest in the insured's well-being, do not qualify as third-party owners unless they are also the policyholders, which would make them the owners rather than third parties.