Life License Qualification Program (LLQP) 2025 – 400 Free Practice Questions to Pass the Exam

The Policy Loan provision is essential in a life insurance policy as it allows the policy owner to borrow against the policy's guaranteed cash value. This provision enables access to funds without needing to surrender the policy, with the loan amount capped at the cash value accumulated at that point. The policy owner must eventually repay the loan with interest; otherwise, the unpaid amount will be deducted from the death benefit payable to beneficiaries upon the insured's death.

This feature is particularly advantageous for policyholders who may face financial needs while wanting to retain their life insurance coverage. In contrast, the Automatic Premium Loan provision typically directs an insurer to automatically use the cash value of the policy to pay overdue premiums, which does not specifically provide a loan option but rather aids in policy maintenance. The Accelerated Benefits provision allows access to a portion of the death benefit under specific circumstances, such as terminal illness, and does not directly relate to the cash value. Finally, the Consideration clause outlines the exchange of value between the insurer and the insured but is not directly linked to loans or cash value provisions.