State RegulationsAZ specificDifficulty 2/5
A policyowner requests a policy loan specifically to pay an overdue premium. Under A.R.S. 20-1208, the insurer:
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
A.R.S. 20-1208's deferment right applies to cash loans other than those taken for premium payment. A loan that keeps the policy itself alive cannot be parked for months, because doing so would defeat the grace and reinstatement protections built around premium payment. The exception is narrow but always tested.
Why the other options are wrong
- A) the 6-month deferment does not reach premium-payment loans.
- C) the statute does not forbid premium-payment loans; it forbids deferring them.
- D) no DIFI approval is involved in loan deferment.
Memory hook
Premium loans get no waiting room.