State RegulationsAZ specificDifficulty 2/5
An insurer in Arizona defers for six months a policy loan a policyholder requested solely to pay a premium. Under A.R.S. 20-1208 and 20-1209, is this lawful?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The deferment right in A.R.S. 20-1208 and 20-1209 applies to cash loans other than those applied to premium payment. Deferring a premium-purpose loan for six months is therefore improper, and the policyholder could raise the error with the Arizona Department of Insurance and Financial Institutions (DIFI).
Why the other options are wrong
- B) The premium-purpose exception carves these loans out of the deferment allowance.
- C) Policy duration is irrelevant; the exception turns on the loan's purpose.
- D) Non-premium cash loans may lawfully be deferred up to 6 months, so the blanket statement is wrong.
Memory hook
Defer cash loans freely - but not premium-pay loans.