Automatic Premium Loan
|Automatic Premium Loan|
Automatic Premium Loan - "shall become operative if requested in the application for the Contract, or whenever a written request by the Annuitant is received by the Company at its Home Office of written request by the Annuitant to that effect". The application for this Automatic Premium Loan will be allowed to a proper appointment of the arrangement to the business to protected all Automatic Premium Loans (Reports of the Tax Court of the United States, s. 319). The Automatic Premium Loan the sum loaned is defined by the net cash volume and also if the guaranteed dies before total payment, is deducted from the death profit (K. Clark 2010, s. 83). It is sometimes identified with a life insurance policy. Automatic Premium Loan is one of specialized specification which approves insure to eliminate the extra amount from the accumulate policy price if the policyholder can not or does not pay for the policy. The advantage of automatic premium loan is that it reduces the risk that your insurance policy will expire (A. Steuer 2010, s. 41).
How Automatic Premium Loan Works
Short explanation how it works:
- If someone wants to get an automatic premium loan, it is obligated to have a life insurance policy (in cash).
- Each folded policy paid includes the cash value of the policy. Policyholders can take out various loans against the cash value of their policy. This is higher than the nominal value of the policy.
- Policy rules may indicate a ban on borrowing, but this is an individual matter.
- Taking out this loan does not require a loan agreement or other certificates. The loan is transferred based on the monetary value of the policy, and if it is not repaid, it is deducted from the monetary value.
- If the owner chooses to cancel the policy, the loan amount and interest on the option's cash value before closing (Bisys Educational Services 2004. s. 183).
- The reserve for an automatic premium loan can bring a loan (based on the monetary value of the fixed life insurance policy). When the policy has started to compile cash value, protection is only possible during this period.
- The aggregation of cash value starts 2 to 3 years after the approach will not apply. Until then, "grace" protection is available for life insurance (O'Malley P. i in. 2014, s. 90-91).
- Bisys Educational Services (2004), Life and Health Insurance License Exam Cram: LIFE HLTH INSUR LIC EXAM CRM_p1, Pearson Education
- Clark K. (2010), The Solomon Exam Prep Guide: Life and Health Insurance License Exams for Ohio, First Books
- Garman E., Forgue R. (2014), Personal Finance, Cengage Learning
- O'Malley P. (2014), 2016 - 2017 Estate Planning Guide for Ontarians - “Completing the Puzzle”, Xlibris Corporation
- Reports of the Tax Court of the United States (1961), U.S. Government Printing Office, Tom 37
- Steuer A. (2010), Questions and Answers on Life Insurance: The Life Insurance Toolbook, Greenleaf Book Group
Author: Sandra Kaczara