West Virginia State Life Insurance Practice Exam

What is the maximum fixed interest rate that can be charged on a life policy loan in West Virginia?

1. 6%

2. 7%

3. 8%

4. 9%

The correct answer is: 8%

In West Virginia, the maximum fixed interest rate that can be charged on a life policy loan is established by state regulations, which set this rate at 8%. This means that any loan taken against the cash value of a life insurance policy cannot exceed this rate for the interest charged. Understanding this maximum interest rate is crucial for policyholders considering borrowing against their life insurance. It ensures that borrowers are not subjected to excessively high interest rates, thus protecting their financial interests. Additionally, this fixed rate is important for maintaining predictability in repayment amounts, allowing borrowers to plan their finances more effectively. While other options suggest higher interest rates, they do not align with the established regulations in West Virginia. Knowing the correct maximum rate is essential for both insurance professionals and consumers to avoid misunderstandings and to adhere to the state's legal framework governing life insurance loans.