Life Insurance Policy Provisions, Options, and Riders
An insured dies with a policy loan outstanding. How does the insurer settle the claim?
Answer and explanation
Answer: A. The outstanding loan and its accrued interest are deducted from the death benefit, so the beneficiary receives the net amount. The insurer does not chase the estate, forgive the debt, or hold up the claim while repayment is arranged.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, policy loans
More life insurance policy provisions, options, and riders questions
- An owner stops paying premiums on a whole life policy and elects nothing. What does the policy generally do with the cash value?
- An owner takes a partial surrender in the fourth policy year of a universal life contract. What should be expected?
- An owner wants the original permanent insurance plan to continue for a smaller amount with no further premiums. Which nonforfeiture option fits?
- An owner wants to replace a named irrevocable beneficiary with someone else. What additional requirement applies?
- Does the grace period in section 3203(a)(1) apply to the first premium?
- How do reduced paid-up and extended term differ in what each keeps from the original policy?
621 New York questions like this one.
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