P purchases a $50,000 term life insurance policy in 2005. One of the questions on the application ask if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. What will the insurer pay to P's beneficiary?

P purchases a $50,000 term life insurance policy in 2005. One of the questions on the application ask if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. What will the insurer pay to P's beneficiary?


$50,000 minus any outstanding policy loans

The automatic premium loan provision is designed to

A - avoid a policy lapse

B - provide a course of revenue to the insurance company

C - allow a policyowner to request a policy loan

D - allow a policyowner to take out additional coverage without evidence



Answer: A - avoid a policy lapse

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