State RegulationsAZ specificDifficulty 2/5
A policyholder in Arizona requests a policy loan specifically to pay an overdue premium. Under A.R.S. 20-1208 and 20-1209, may the insurer defer this loan?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
A.R.S. 20-1208 and 20-1209 allow deferment of cash loans up to 6 months, but expressly exclude loans applied to the payment of premiums from the deferment right. A premium-purpose loan must be handled without the 6-month deferral.
Why the other options are wrong
- A) The premium-payment exception removes this loan from the 6-month deferment allowance.
- B) No one-year deferment exists; the cap is 6 months, and premium-purpose loans are excluded entirely.
- C) Indefinite deferral is not permitted for any policy loan.
Memory hook
Premium-purpose loans skip the deferment line.