State RegulationsGA specificDifficulty 1/5
In a Georgia individual life policy, the standard policy loan provision may charge interest at a maximum rate of:
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under O.C.G.A. § 33-25-3, the maximum rate of interest that a standard policy loan provision in a Georgia individual life policy may charge is 6% per annum compounded annually. The same 6% ceiling applies to reinstatement interest, so a producer quoting a policy loan should never present the rate as open-ended or discretionary.
Why the other options are wrong
- A) The insurer's board of directors cannot set the loan interest rate; the statute caps it.
- C) No advance approval by the Insurance Commissioner is required or provided for under O.C.G.A. § 33-25-3.
- D) The loan rate does not float with portfolio earnings; it is capped at 6% per annum compounded annually.
Memory hook
Loans cost six, just like reinstatement.