Which type of insurance policy is least likely to offer the Automatic Premium Loan provision?

The correct answer is that a decreasing term policy is least likely to offer the Automatic Premium Loan provision. This is because the Automatic Premium Loan feature is typically associated with permanent life insurance policies, such as whole life and universal life, which have a cash value component.

In a whole life policy, for example, the cash value accumulates over time, and if the policyholder fails to pay the premium, the insurer can automatically borrow from this cash value to cover the premium, thus keeping the policy in force. Universal life policies also have a cash value that functions similarly, enabling the automatic loan feature.

Decreasing term insurance, on the other hand, is a temporary life insurance product designed to provide coverage for a specific period, with the face amount decreasing over time. Since it doesn’t build cash value, there’s no mechanism for borrowing against it, and the primary focus is on providing a death benefit rather than on accumulating savings. Therefore, the Automatic Premium Loan provision is generally not applicable to decreasing term policies.

Variable life insurance also has a cash value component that can fluctuate based on investment performance, and while it might come with complexities, it may still be designed to offer similar features to whole and universal life policies.