State RegulationsMA specificDifficulty 2/5
A Massachusetts policyholder applies in writing for a policy loan. For which purpose may the insurer NOT defer granting the loan under M.G.L. c. 175, § 142 and § 132(9)?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
M.G.L. c. 175, § 132(9) and § 142 let the Massachusetts insurer defer granting a policy loan for up to six months from the written application — but the deferral does not apply where the loan is to pay premiums on the policy itself. The logic is protective: if the insurer could stall a premium loan, its own deferral could lapse the policy, defeating the very coverage the loan would preserve. Loans for any other personal or business purpose may be deferred within the six-month limit.
Why the other options are wrong
- A) A business investment loan is an ordinary policy loan; the insurer may defer it for up to six months from the written application.
- C) A tuition loan carries no special protection; only premium-payment loans are exempt from the deferral.
- D) Debt consolidation is likewise an ordinary purpose, subject to the six-month deferral under M.G.L. c. 175, § 132(9).
Memory hook
A loan that saves the policy can't be made to wait.