State RegulationsOH specificDifficulty 1/5
For individual life policies issued on or after April 1, 1982, the maximum fixed annual interest rate an Ohio insurer may charge on a policy loan is:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
ORC 3915.051 caps policy-loan interest on individual life policies issued on or after April 1, 1982 at not more than 8% per annum on a fixed basis. As an alternative, the statute permits an adjustable rate capped at the higher of the Moody's corporate bond yield average from two months prior or the policy's cash-surrender rate plus 1%, adjusted at intervals of at least every 12 months and only by changes of 0.5% or more. Interest above the statutory ceiling cannot be charged on a policy loan.
Why the other options are wrong
- A) 5% per annum understates the statutory cap; the fixed-rate maximum under ORC 3915.051 is 8% per annum.
- B) 6% per annum is below the statutory fixed maximum; Ohio allows up to 8% per annum on a fixed basis for policies issued on or after April 1, 1982.
- D) Ohio law does impose a maximum; ORC 3915.051 fixes the 8% per annum ceiling for fixed-rate policy loans, with a defined adjustable-rate alternative.
Memory hook
Policy-loan interest in Ohio tops out at 8% — fixed and simple.