Investment Company and. Variable Contracts Products Principals (Series 26) Practice Exam

In a variable life (VL) contract, if the policyowner takes out a loan that exceeds the contract's net cash value, they are typically allotted a specific period to repay that loan to maintain the contract's benefits. This period is generally 31 days. The rationale behind this timeframe is to ensure that policyowners have an adequate opportunity to address any outstanding loan amounts that could put the policy at risk if not managed properly. If the loan is not repaid within this 31-day grace period, the insurer may take actions such as reducing the death benefit or terminating the policy, depending on the policy's terms and conditions. Understanding the importance of this repayment period is crucial for policyowners as it underscores the need for vigilance in managing loans against the policy. Failure to comply could have significant financial ramifications, highlighting the importance of the policyowner's responsibility in keeping their policy in good standing.