Indiana State Life and Health Insurance Practice Exam

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What is the maximum fixed interest rate that a life policy loan can charge in Indiana?

  1. 7%

  2. 8%

  3. 9%

  4. 10%

The correct answer is: 8%

In Indiana, the maximum fixed interest rate that can be charged on a life policy loan is set at 8%. This regulation is in place to protect policyholders from excessively high loan interest charges that could lead to a financial burden, ensuring that the rates remain manageable and fair. This means that when a policyholder borrows against their life insurance policy, they can be assured that the interest charged will not exceed this limit, promoting responsible lending practices within the insurance industry. Setting the fixed interest rate at this level also encourages more policyholders to utilize the loan feature of their life insurance policies when needed, without the fear of incurring unmanageable interest costs.

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