What term refers to an unpaid premium that gets covered by a loan from the policy’s cash value?

The term that refers to an unpaid premium that gets covered by a loan from the policy’s cash value is the automatic premium loan provision. This provision is a feature found in some whole life insurance policies that allows the insurer to automatically take a loan against the policy’s cash value to pay for any premium that is missed. This prevents the policy from lapsing due to non-payment and ensures that the policy remains in force, maintaining its benefits for the policyholder.

This option is essential for policyholders who may encounter temporary financial difficulties, as it provides a safeguard against losing coverage just because a premium could not be paid on time. By utilizing the cash value as a loan source, it also allows the policyholder to maintain their insurance protection while having the flexibility to repay the loan later or allow it to be deducted from the death benefit upon the policyholder's passing.

In contrast, other terms listed do not specifically address this automatic feature or the connection to unpaid premiums through cash value loans. For instance, premium advance and premium financing refer to different strategies for managing premium payments but do not utilize the policy's cash value in the same automatic manner as the automatic premium loan provision. Cash value loan, while related, does not encompass the idea of automatic payment of unpaid