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What is the legal effect of nomination on ownership of a life insurance policy?

hard Q9 of 15
Insurance Awareness - Life Insurance - LIC
What is the legal effect of nomination on ownership of a life insurance policy?
ANomination always transfers ownership to nominee
BNomination cancels any prior assignment
CNomination appoints beneficiary but does not transfer ownership
DNomination makes nominee policy owner immediately
Step-by-Step Solution
  1. Step 1: Distinguish nomination from assignment

    Nomination and assignment have different legal effects.
  2. Step 2: Apply ownership principle

    Nomination only designates a beneficiary; ownership remains with the policyholder or assignee.
  3. Final Answer:

    Nomination appoints beneficiary but does not transfer ownership → Option C
  4. Quick Check:

    Ownership changes only through assignment, not nomination.
Quick Trick: Nomination ≠ Ownership.
Common Mistakes:
MISTAKES
  • Believing nomination overrides assignment.
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