an insured dies before an outstanding loan on the policy is paid back. if the policy has an automatic…

an insured dies before an outstanding loan on the policy is paid back. if the policy has an automatic premium loan provision, which of the following is true? a. the beneficiary must pay the loan in full before any death benefit will be paid. b. the beneficiary will receive half of the full death benefit. c. the amount of the loan and any interest will be taken out of the death benefit. d. the policy will be voided.

an insured dies before an outstanding loan on the policy is paid back. if the policy has an automatic premium loan provision, which of the following is true? a. the beneficiary must pay the loan in full before any death benefit will be paid. b. the beneficiary will receive half of the full death benefit. c. the amount of the loan and any interest will be taken out of the death benefit. d. the policy will be voided.

Answer

Brief Explanations:

When an insured dies with an outstanding policy - loan and there is an automatic premium loan provision, the insurance company will deduct the loan amount and any accrued interest from the death benefit. The beneficiary does not have to pay the loan first (option A is incorrect), and there is no rule that the beneficiary will receive half of the death - benefit (option B is incorrect). The policy is not voided just because of an outstanding loan (option D is incorrect).

Answer:

C. The amount of the loan and any interest will be taken out of the death benefit.