POLICY LOANS

Which of the following is a correct statement about loans against life insurance policies? [A] They are difficult to obtain. [B] They must be repaid according to a precise schedule. [C] A co-signer is required. [D] The company will generally not make available the entire cash value.

The company will generally not make available the entire cash value.

When policyowner takes a loan against his life insurance policy, why should he continue to pay regular premiums? [A] The cash value will generally increase more rapidly than the loan plus the loan's interest. [B] The policy will surely lapse if regular premiums are not paid. [C] Insurers require this. [D] Insurance law requires this.

The cash value will generally increase more rapidly than the loan plus the loan's interest.

If an insured takes out a loan against her life insurance policy, which of the following serves as collateral? [A] The policy's face amount [B] The policy's cash value [C] Any real property the insured chooses to use as collateral [D] Any real or personal property the insured chooses to use as collateral

The policy's cash value