69. Which of the following is a provision in an interest-sensitive life policy which allows the policyowner to withdraw the policy's cash value interest free?
Answer: A
Partial Surrender allows the policyowner to withdraw the policy's cash value interest free.
Partial surrender is a provision in an interest-sensitive life policy that enables the policyowner to withdraw a portion of the policy's cash value without incurring interest charges.
A) Partial Surrender.
This option is correct because partial surrender specifically permits the policyowner to withdraw cash value from the policy without the obligation to pay interest on that amount. It effectively allows access to funds while maintaining the policy's overall benefits.
B) Automatic Premium Loan.
This option is incorrect as the automatic premium loan provision allows the insurer to automatically use the policy's cash value to pay overdue premium payments. While it provides a safety net for maintaining coverage, it does not allow for interest-free withdrawals.
C) Waiver of Premium.
This option is incorrect because the waiver of premium provision applies when the policyowner becomes disabled, allowing them to skip premium payments without losing coverage. It does not relate to withdrawing cash value from the policy.
D) Spendthrift Clause.
This option is incorrect as the spendthrift clause is designed to protect the policy proceeds from creditors and to prevent beneficiaries from selling or assigning their benefits. It is not related to withdrawing cash value from the policy.
Conclusion
Partial surrender is the only option that directly addresses the ability to withdraw cash value interest free from an interest-sensitive life policy. The other options either describe different provisions that do not allow for such withdrawals or serve different purposes entirely, highlighting why partial surrender is the correct answer.