AD Banker Comprehensive Practice Exam

What must occur for the interest to be payable on a policy at the time of death?

1. Policy must be active for at least five years

2. Beneficiary must request it

3. Loan payments must be up to date

4. Claim must be filed immediately

The correct answer is: Claim must be filed immediately

For interest to be payable on a life insurance policy at the time of death, the claim must be filed in a timely manner. This is important because life insurance companies typically do not begin accruing interest on the death benefit until they are officially notified of the claim. Filing the claim promptly ensures that the insurance company can process it efficiently and start the necessary calculations, which may include any interest due. While factors such as the policy's length or the beneficiary's request can influence the payout process, they do not inherently determine whether interest will be applied. Similarly, keeping loan payments up to date may affect the overall benefit amount if there are outstanding loans against the policy, but it does not specifically influence the payable interest on the death benefit at the time of death. Prompt claim filing directly aligns with the requirement for interest to be calculated and payable.