A wife owns a life insurance policy on her husband, who is the insured. Their adult daughter is the named beneficiary. Who may exercise the right to borrow against the policy's cash value?

Why C is correct

Under the Michigan Insurance Code (Insurance Code of 1956), the rights of ownership — including borrowing against the policy's cash value, surrendering the policy, and changing the beneficiary — belong to the policyowner. Here the wife owns the policy even though her husband is the insured and their daughter is the beneficiary, so only she can exercise the loan right. Neither insured status nor beneficiary status confers any control over the contract during the insured's lifetime.

Why the other options are wrong

• A) The insured has no automatic contractual rights merely by being the subject of the coverage; ownership is what matters.
• B) A beneficiary has no rights over the policy while the insured is alive — the designation takes effect only at death.
• D) The insurer holds and invests the cash value but cannot exercise the owner's contractual rights on its own behalf.

Memory hook

Insured insures, beneficiary waits, owner decides.