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  2. Insurance Terms Starting With A

Automatic Premium Loan

What is an Automatic Premium Loan?

An automatic premium loan (APL) is a provision found in certain insurance policies. It allows the insurer to automatically borrow money from the policy's value to pay outstanding premium payments. APLs are most common in cash value life insurance policies, like whole life policies. When a policyholder fails to make a premium payment by the due date, the automatic premium loan feature kicks in. The APL prevents the policy from lapsing. The borrowed amount, plus any applicable interest, is then added to the policy's outstanding loan balance. By utilizing automatic premium loans, policyholders can ensure their coverage remains in force even if they miss a premium payment, helping to prevent the unintended lapse of the policy.