Question 2012 of 287 · Texas Life, Accident and Health Agent Exam
The automatic premium loan provision
Exactly one answer is correct.
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Correct answer to question 2012
- D: uses cash value to pay an overdue premium so the policy does not lapse
Explanation
When the grace period ends with the premium unpaid, the insurer advances the premium as a loan against the cash value. The loan accrues interest and reduces the cash value and death benefit.
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