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Arkansas Life And Health Insurance Practice Exam

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Which provision allows an insurer to borrow from the cash value of a policy in order to pay premiums due and prevent a lapse in coverage?
Correct Answer:
Accelerated Benefits
Explanation:
The correct answer is Automatic Premium Loan. This provision allows an insurer to borrow from the cash value of a policy to pay premiums due and prevent a lapse in coverage. Accelerated Benefits allow the policyholder to receive a portion of the death benefit early if certain conditions are met, such as a terminal illness. Extended Term Insurance allows the policyholder to use the cash value of a life insurance policy to purchase term insurance for the same face amount as the original policy for a specific period. Waiver of Premium is a provision that waives premium payments if the policyholder becomes totally disabled.

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