In the event of premium default, which life insurance provision will use the cash value to keep the policy in force?

The correct answer is the automatic premium loan provision. This feature is designed to assist policyholders who may face difficulties in making premium payments. When a premium payment is not made and the policy has a cash value, the automatic premium loan provision allows the insurer to automatically borrow against the policy’s cash value to cover the missed premium due. This ensures that the policy remains in force, even though the premium has not been paid.

By utilizing the cash value in this manner, the policyholder avoids the risk of policy lapse while still maintaining the benefits of their life insurance coverage. If the automatic premium loan is enacted, the loan amount will accumulate interest over time, and unpaid loans can ultimately reduce the death benefit if not repaid.

Other options do not serve this purpose of using cash value to maintain the policy in force in the event of a payment default. The extended term option involves converting the cash value into term insurance for a specific duration, rather than using it to cover a missed premium. The reduced paid-up option allows the policyholder to use the cash value to purchase a reduced amount of paid-up insurance without further premium payments, which also does not keep the original policy in force. The term conversion option allows the policyholder to convert a term policy into a