Policy Riders, Provisions, Options, and Exclusions
A variable life owner takes a policy loan and leaves it outstanding. Which effect should the owner expect?
Answer and explanation
Answer: C. Policy loans reduce available cash value, may reduce the death benefit, accrue interest, and can increase lapse risk. They do not increase policy value or eliminate charges.Source: U.S. Securities and Exchange Commission — Investor Bulletin: Variable Life Insurance — The Death Benefit, Policy Loans, and Other Optional Insurance Features > Policy Loans
More policy riders, provisions, options, and exclusions questions
- When an increasing term rider is added to a whole life policy to provide a return-of-premium death benefit, what does the total benefit equal at death?
- When does the free-look period for a newly delivered life insurance policy begin?
- When is a contingent beneficiary generally next in line to receive life insurance proceeds?
- Where is the insurer's fundamental obligation to pay the death benefit upon receipt of proof of death set forth?
- Which beneficiary designation generally allows the owner to make a change without the beneficiary's consent?
- Which description best identifies the coverage supplied by a term rider?
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