State RegulationsMA specificDifficulty 2/5
A Massachusetts policyholder elects to surrender her life policy for its cash surrender value. Under M.G.L. c. 175, § 132(9) and § 142, how long may the insurer defer paying the surrender proceeds?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
M.G.L. c. 175, § 132(9) together with § 142 allows the Massachusetts insurer to defer payment of a cash surrender value for up to six months from the date of the election to surrender. The deferral is a liquidity protection for the insurer — surrender values may be invested in longer-term assets — but it is strictly bounded. When the policyholder elects surrender, payment must come no later than six months out; the insurer cannot hold the funds indefinitely.
Why the other options are wrong
- A) 12 months doubles the statutory cap; the deferral runs at most six months from the election with surrender.
- B) 18 months is a Mini-COBRA duration with no application to surrender deferrals under M.G.L. c. 175, § 132(9).
- C) The clock runs from the election to surrender, not from a policy anniversary, and the cap is six months rather than three.
Memory hook
Six months is the outer limit for both loans and surrenders in Massachusetts.