State RegulationsOH specificDifficulty 2/5
An insured in Cincinnati borrowed against his life policy and then missed several loan repayments, but his total indebtedness remains below the policy's loan value. The insurer now wants to declare a forfeiture. What do Ohio's prohibited-provision rules require?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
ORC 3915.09(A) prohibits a forfeiture of the policy for failure to repay a policy loan or interest while the total indebtedness is less than the loan value. Only when the indebtedness equals or exceeds the loan value may the policy provide for forfeiture, and then only after the stipulated notice — one month after notice mailed to the insured's and assignee's last known address, per ORC 3915.05(G). This insured's shortfall below loan value makes forfeiture unlawful outright.
Why the other options are wrong
- A) Immediate lapse on a missed payment is exactly the forfeiture ORC 3915.09(A) prohibits while the debt is under the loan value.
- B) A 10-day notice scheme is not what the statute allows; forfeiture is barred altogether while the indebtedness is less than the loan value, and the statutory notice when it applies runs a month after mailing under ORC 3915.05(G).
- D) A fixed 60-day lapse ignores ORC 3915.09(A): with indebtedness below loan value, no forfeiture may occur at all.
Memory hook
Debt under loan value? The policy cannot be forfeited, period.