State RegulationsTX specificDifficulty 2/5
Under TIC 1101.009, what is the maximum amount a Texas insurer must lend against an eligible life insurance policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under TIC 1101.009, the loan is available in an amount equal to the policy's cash value plus dividend additions, or a lesser amount at the owner's option, and it is secured only by the policy. That is why a policy loan is not a personal obligation: if the total owed grows to equal or exceed the cash value, the policy ceases to be in force instead of the insurer pursuing the owner. Return of premiums paid is not the measure of the loan value.
Why the other options are wrong
- B) The loan value is based on the policy's cash value, not on the face amount less indebtedness.
- C) The measure is the cash value plus dividend additions, not the sum of premiums paid into the policy.
- D) The amount is fixed by TIC 1101.009; the insurer has no discretion to lend less once the statutory conditions are met.
Memory hook
You can borrow cash value, not face amount and not your premiums back.