Question

M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the?

a) Death benefit payable to the beneficiary
b) Cash surrender value
c) Premiums paid by M
d) Beneficiary's personal funds

Answer 1

When an insured person has an outstanding policy loan at the time of their death, the insurance company will deduct the outstanding loan balance from the death benefit payable to the beneficiary.

Step-by-step explanation:

When an insured person has an outstanding policy loan at the time of their death, the insurance company will deduct the outstanding loan balance from the death benefit payable to the beneficiary. In other words, the amount of the loan will be subtracted from the total amount that the beneficiary would receive as a death benefit. This ensures that the loan is repaid before the remaining funds are disbursed to the beneficiary.