State RegulationsMA specificDifficulty 1/5
Under M.G.L. c. 175, § 142, what must a Massachusetts life insurance policy contain with respect to policy loans?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
M.G.L. c. 175, § 142 requires life insurance policies to contain a policy loan provision: the policyholder is entitled to borrow against the policy's loan value, with the policy standing as security for the advance. The provision works together with the deferral rule of M.G.L. c. 175, § 132(9), which lets the insurer delay granting a loan by up to six months from the written application — except where the loan is to pay premiums. Access to the policy's own value through borrowing is therefore a statutory feature of the contract, not a carrier's courtesy.
Why the other options are wrong
- A) Massachusetts law does the opposite: M.G.L. c. 175, § 142 mandates a loan provision rather than a prohibition on borrowing.
- B) The statute imposes no one-year repayment schedule; the loan accrues against the policy's value and effectively is settled from the policy proceeds.
- D) Loans are not confined to the first year; the loan value of the policy is available under M.G.L. c. 175, § 142 as the policy's value accrues.
Memory hook
Section 142 makes the loan window a fixture: borrow against your own policy value.