PSI Life Exam Practice Test

Who is authorized to make changes to the terms of a life insurance contract?

1. Any agent of the company

2. A policyholder's representative

3. An officer of the company

4. A state insurance commissioner

The correct answer is: An officer of the company

The authority to make changes to the terms of a life insurance contract typically resides with an officer of the company. This is because such changes often require official approval and are binding, necessitating a level of authority that only an officer of the company possesses. Officers are responsible for the governance and operation of the insurance company and hold the power to enter into or modify contracts in accordance with company policy and regulatory requirements. On the other hand, while agents are representatives of the company, they do not usually have the authority to alter contract terms without explicit permission from the company. A policyholder's representative might assist or advocate for changes but does not have the legal capacity to enforce changes to the contract. Similarly, although a state insurance commissioner regulates and oversees the industry to protect consumers, this individual does not have the direct authority to modify the terms of an individual insurance contract itself; that authority lies within the company’s designated officers.