Policy Riders, Provisions, Options, and Exclusions
A policyowner compares a cash-value withdrawal with a policy loan. Which distinction is generally accurate?
Answer and explanation
Answer: A. A withdrawal removes policy value and may be subject to charges or tax consequences. A policy loan creates debt, generally accrues interest, and can reduce cash value or death proceeds if outstanding.Source: U.S. Securities and Exchange Commission — Investor Bulletin: Variable Life Insurance — Policy Loans; Fees and Expenses > partial withdrawals and loan interest
More policy riders, provisions, options, and exclusions questions
- A designation names three primary beneficiaries but assigns no percentages. All three survive the insured. Under the default stated in the Compact application standard, how are proceeds divided?
- A family has a children's rider that covers eligible children at one premium rate. They later adopt another eligible child. Which rider feature may apply?
- A flexible-premium life policy has lapsed and the owner applies for reinstatement within the contractual period. Which combination may the insurer require?
- A flexible-premium policyowner pays the illustrated planned premium, but policy value later becomes insufficient for the monthly deduction. Which conclusion is most accurate?
- A governing beneficiary instrument expressly states how to distribute proceeds after simultaneous deaths. How does that fact affect Texas's default survival rules?
- A grandparent buys a juvenile life policy on a 5-year-old grandchild with a payor benefit rider. The grandparent dies 3 years later. What occurs regarding policy premiums?
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