B is correct and is stated directly in Hawaiʻi law. HRS §431:10D-103 governs policy-loan interest rates for policies issued on or after June 22, 1982 . It permits the policy to contain either a maximum interest rate of not more than 8% per annum or an adjustable maximum interest rate established periodically by the life insurer as permitted by law. An insurer offering the adjustable-rate approach must also make available policies using the fixed-rate provision.
The statute also regulates the adjustable rate. It establishes a benchmark based principally on a corporate-bond yield measure or the interest rate used to compute the policy's cash surrender value plus one percentage point. The rate must be determined at specified intervals, at least annually, and policyholders must receive required notices regarding initial rates and applicable rate increases.
Options A, C, and D therefore conflict with the statutory maximum-rate structure. Five percent is not the applicable fixed maximum for policies governed by this provision, while ten percent and eighteen percent exceed the fixed 8% alternative stated by Hawaiʻi law.
Policy loans themselves are specifically included in the Life-General Knowledge portion of the current Hawaiʻi examination outline.
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