Automatic Premium Loan Provision


Definition of "Automatic premium loan provision"

Jean Andrews and Christine Joyce real estate agent
Jean Andrews and Christine Joyce, Real Estate Agent Long and Foster Real Estate

Life insurance policy clause. If at the end of the grace period the premium due has not been paid, a policy loan will automatically be made from the policy's cash value to pay the premium. The primary purpose is to prevent unintentional lapse of the policy. Funds in the cash value must at least be equal to the loan amount plus one year's interest. Many experts recommend this provision because under some circumstances the premium may go unpaid because of illness, vacations, or inadvertence.

 

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