Final answer:
In a life insurance policy, the policyholder controls changes in premium payments, face values, and loans, as per the terms and conditions of the policy contract. Option 1 is correct.
Step-by-step explanation:
Control over changes in premium payments, face values, and loans in a life insurance policy is typically vested in the policyholder. The policyholder is the person who owns the policy and has the right to make decisions regarding these aspects, subject to the terms and conditions of the policy contract.
Premium payments are determined by the policy and can often be adjusted by the policyholder, who can choose to increase or decrease the payment amounts or frequency, within certain limits. The face value, or the death benefit of the policy, can also generally be changed by the policyholder. Lastly, policyholders have the option to take out loans against the cash value of their policies, if available, which must then be repaid with interest.