Which of the Following Statements About Life Insurance Policy Loans

question 58

Multiple Choice

Which of the following statements about life insurance policy loans is (are) true?
I.Interest is not required on a life insurance policy loan,as the policyholder is borrowing his or her own money.
II.If there is an outstanding loan when the insured dies,payment to the beneficiary is reduced by the amount of the loan.

• A)I only
• B)II only
• C)both I and II
• D)neither I nor II

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Definitions:

Compounded Annually

This refers to the process by which the interest earned on an investment or savings is calculated once a year, adding to the principal for the next year's interest calculation.

Periodic Interest Rate

This is the interest rate charged or earned over a particular period of time, often calculated based on the annual interest rate.

Payment Interval

The frequency at which payments are made, such as monthly, quarterly, or annually.

Compounded Annually

Interest on an investment or loan calculated once a year, taking into account the interest that has accrued in the previous period.