Life Insurance Policy Provisions, Options, and Riders
An owner has relied on the automatic premium loan for several years running. What is the consequence?
Answer and explanation
Answer: B. Each advance is a loan bearing interest, so repeated use erodes the cash value and the policy lapses once the debt equals it. The advances are not free, the insurer does not automatically cancel the feature, and the face amount is not cut as they are made.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, automatic premium loan
More life insurance policy provisions, options, and riders questions
- What does a waiver of cost of insurance rider cover on a universal life policy during total disability?
- What does an accidental death benefit rider generally provide when the insured dies from a covered accident?
- What does an owner gain from paid-up additions that the one-year term dividend option does not provide?
- What does the automatic premium loan provision do at the end of the grace period?
- What does the cash surrender nonforfeiture option give an owner who ends a permanent policy?
- What does the one-year term dividend option buy with the declared dividend?
621 New York questions like this one.
Every answer explained, the ones you miss come back on a spaced schedule, and a plan built from your exam date.