New Jersey Life Insurance Exam Practice Question
What is the purpose of the automatic premium loan rider?
Correct Answer: B
Rationale: The automatic premium loan rider is designed to protect the policyowner against an unintentional lapse of coverage. It allows the insurer to automatically use the cash value of the policy to pay premiums if the policyholder fails to make a payment, ensuring continuous coverage.
Option A refers to a guaranteed insurability rider, which allows additional insurance purchases without evidence of insurability, but it does not address premium payments.
Option C describes a waiver of premium rider, which covers premiums during permanent disability, but is not related to automatic loans.
Option D incorrectly suggests a feature of term policies, which do not typically have cash value or allow for partial surrenders.
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