Florida Life and Health Insurance License Test 2025 – 400 Free Practice Questions to Pass the Exam

Question: 1 / 400

Which statement is TRUE in regards to a policy loan?

Policy loans are available on all types of policies

Past-due interest on a policy loan reduces the total death benefit

Past-due interest on a policy loan is added to the total debt

A policy loan allows the policyholder to borrow money against the cash value of their life insurance policy. Interest is charged on the amount borrowed, and if the interest is not paid, it accrues and becomes part of the total debt. Option A is incorrect as not all types of policies offer policy loans. Option B is incorrect because past-due interest does not affect the total death benefit of the policy. Finally, option D is incorrect because policy loans are available even if the policy is not surrendered.

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Policy loans are only available in the event of surrender

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