Policy Riders, Provisions, Options, and Exclusions
A cash-value policy has an elected automatic premium loan provision and an unpaid premium at the end of the grace period. If sufficient loan value exists, what occurs?
Answer and explanation
Answer: D. An elected automatic premium loan provision uses available policy loan value to pay an overdue premium, helping prevent unintended lapse. The transaction creates policy indebtedness and requires sufficient value.Source: New York State Department of Financial Services — Life Insurance Information for Consumers — Optional Riders & Supplemental Benefits > Automatic Premium Loan Provision
More policy riders, provisions, options, and exclusions questions
- A policy names one primary beneficiary and one contingent beneficiary. The primary beneficiary dies before the insured, but the contingent beneficiary survives the insured. Who receives the proceeds under the usual designation?
- A policyowner compares a cash-value withdrawal with a policy loan. Which distinction is generally accurate?
- A policyowner exercises a long-term care rider on a life policy and receives benefits. What is the effect on the policy's death benefit?
- A policyowner wants a lender to receive enough death proceeds to satisfy a loan balance. Which policy action may accomplish this?
- A policyowner wants disability protection on a flexible-premium universal life policy. Which rider most directly addresses the policy's recurring mortality charge?
- A policyowner wants level term coverage on a spouse under the owner's base life policy. Which rider is designed for that purpose?
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