Indiana State Life and Health Insurance Practice Exam

A life policy loan in Indiana cannot charge a fixed rate of interest higher than?

1. 7%

2. 8%

3. 9%

4. 10%

The correct answer is: 8%

In Indiana, the law stipulates that a life insurance policy loan can charge a maximum fixed interest rate of 8%. This regulation is in place to protect policyholders from excessively high borrowing costs when they take loans against the cash value of their life insurance policies. This limit ensures that the interest rates remain manageable and does not become a financial burden for borrowers who might need to access their policy’s cash value in times of need. By keeping the interest rate capped at 8%, the regulation helps maintain a balance between the interests of insurance companies and the financial wellbeing of consumers. Understanding this limit is crucial for policyholders, as it allows them to make informed decisions regarding their insurance policies and the borrowing against them. Always refer to the most current state regulations or your policy documents, as these can provide clarity on terms and conditions related to policy loans.