Arkansas Life and Health Insurance Practice Exam

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Prepare for the Arkansas Life and Health Insurance Exam with our comprehensive quiz featuring multiple-choice questions and detailed explanations. Gain the knowledge and confidence you need to succeed on your test!

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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?

Accelerated Benefits
Automatic Premium Loan
Extended Term Insurance
Waiver of Premium

The correct answer is: Accelerated Benefits

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.