Final answer:
Claire's case of her father owning a life insurance policy on her is an instance of Third-party ownership, the correct answer being Option 3.
Step-by-step explanation:
When Claire's father took out a policy on her life, where he became the policy owner and Claire was the insured, this situation describes what is known as Third-party ownership of a life insurance policy. This is common, especially in family scenarios where one member takes a policy on another member's life. The correct choice from the given options is Option 3: Third-party ownership.
Third-party ownership means that the person who owns the insurance policy (the policyholder) is different from the person whose life is insured. This is a standard practice in life insurance to provide financial protection and peace of mind for the policyowner, as the insurance payout can support them in case of the insured's premature death.
It's important to distinguish this from the other options like Viatical settlement or Stranger-originated life insurance (STOLI), which involve different conditions and arrangements. Option 3