Arkansas Life and Health Insurance Practice Exam

Sylvia was the insured and owner of a policy that named her husband as the beneficiary. Upon her husband's death, she decided to change the beneficiary designation to her best friend since she has no close living relatives. The insurance company will:

1. Accept the beneficiary change

2. Deny the beneficiary change

3. Require proof of her husband's death

4. Require court approval

The correct answer is: Accept the beneficiary change

In this scenario, since Sylvia is both the insured and the owner of the policy, she has the right to change the beneficiary designation without needing consent from the previous beneficiary or anyone else. As the owner of the policy, Sylvia can exercise her right to change the beneficiary to her best friend, even without close living relatives, and the insurance company should accept this beneficiary change. In cases where the policy owner has the proper authority, insurance companies typically honor beneficiary changes made by the policy owner.