Question 73

The only person who can take loans out on a cash value life insurance policy is the policyowner.

Only the policyowner has the authority to take loans against the cash value of a life insurance policy, as they are the individual who holds the rights to the policy.

A) policyowner.

This option is correct because the policyowner is the individual who purchases the life insurance policy and has control over it, including the ability to borrow against its cash value.

B) Insured.

This option is incorrect because the insured is the person whose life is covered by the policy but does not have the rights associated with ownership, such as borrowing against the policy's cash value.

C) beneficiary.

This option is incorrect as the beneficiary is designated to receive the death benefit upon the insured's passing, but they do not hold any rights to take loans against the policy.

D) insurance company.

This option is incorrect because the insurance company is the entity that issues the policy and manages it. They do not have the right to take loans against the cash value; rather, they provide the terms under which the policyowner can do so.

Conclusion

The policyowner is the only individual with the legal rights to access and take loans against the cash value of a life insurance policy. The other options—insured, beneficiary, and insurance company—do not possess these rights, confirming that option A is the definitive answer.