The incorrect sentence is:
- B. There is no difference between nomination and assignment.
Nomination and assignment are two different concepts in insurance. Nomination is the process of naming a beneficiary to receive the benefits of a life insurance policy in the event of the insured’s death. Assignment is the process of transferring ownership of a life insurance policy to another person.
In a nomination, the insured retains ownership of the policy and the right to change the beneficiary at any time. In an assignment, the insured transfers ownership of the policy to the assignee, who becomes the new owner of the policy and the beneficiary of the death benefit.
Therefore, there is a difference between nomination and assignment. In a nomination, the insured retains ownership of the policy, while in an assignment, the insured transfers ownership of the policy to the assignee.
The other three sentences are correct.
- A. In assignment the rights of the assured are transferred to the assignee.
In an assignment, the insured transfers ownership of the policy to the assignee, who becomes the new owner of the policy and the beneficiary of the death benefit.
- C. In a policy loan the loanee-policyholder is not obligated to pay off the loan.
In a policy loan, the policyholder borrows money from the insurance company using the cash value of the policy as collateral. The policyholder is not obligated to pay off the loan, but if the loan is not repaid, the insurance company may cancel the policy.
- D. As a general rule, no alteration is allowed in the first year of the policy.
As a general rule, no changes can be made to a life insurance policy in the first year after it is issued. This is because the insurance company needs time to assess the risk before making any changes to the policy.