Question

What happens if a policyholder does not repay a policy loan?

a.

The insurance company charges no interest on the outstanding loan

b.

The insurance company cancels the policy immediately

c.

The insurance company deducts the outstanding loan and interest from the policy benefit

d.

The policyholder loses the option to borrow in the future

Answer: (c).The insurance company deducts the outstanding loan and interest from the policy benefit Explanation:If a policy loan is not repaid, the insurance company deducts the outstanding loan and interest from the policy benefit that is payable.

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Q. What happens if a policyholder does not repay a policy loan?

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Explore Relevant Multiple Choice Questions (MCQs)

Q. Why is the policy assigned to the insurer when a policy loan is granted?

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Q. What does the process of nomination in life insurance involve?

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Q. According to Section 39(7) of the Insurance Act, 1938, who becomes beneficially entitled to the claim amount for policies maturing after 26th December 2014?

Q. In the case where the nominee is a minor, what additional step must the policyholder take?

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Q. If no appointee is designated, and the nominee is a minor, who receives the death claim proceeds on the death of the life assured?

Q. How is the death claim payable when more than one nominee is appointed?

Q. How are nominations made after the commencement of the policy made effective?

Q. According to Section 39(11) of the Insurance Act, who is entitled to the proceeds and benefits of a policy if the policyholder dies after the policy matures but before the proceeds are received?

Q. How is assignment of a life insurance policy defined?

Q. How is assignment of a life insurance policy defined?What is the person who transfers the rights, title, and interest in the policy called in an assignment?

Q. What is the term for the person to whom the policy rights, title, and interest are transferred in an assignment?

Q. What happens to the nomination when an assignment is made to the insurance company for a policy loan?

Q. What is the main difference between conditional assignment and absolute assignment in life insurance?

Q. In an absolute assignment, who has control over the policy's rights and benefits?

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