Automatic premium loan is a life insurance policy provision that uses available cash value to pay overdue premiums automatically as policy loans, preventing lapse as long as sufficient value exists. When a scheduled premium is not received by the end of the grace period, the insurer advances the premium as a loan secured by the policyTMs cash value. Interest accrues on the loan balance, and unpaid loans ultimately reduce both cash value and death benefit. Automatic premium loan features are common in traditional whole life and some universal life designs and must be affirmatively elected or declined by the policyowner. While APL preserves coverage during temporary financial strain, unmanaged loan growth can jeopardize long'term policy viability.

Advisors explain automatic premium loan options during policy delivery, helping clients decide whether to elect the provision. During annual reviews, they watch for emerging APL activity on statements as a warning sign of funding problems or missed notices. If APLs are accumulating, advisors may recommend resuming out'of'pocket premiums, paying down loans, reducing face amounts, or performing a 1035 exchange into a better'structured product. Policy service teams can turn APL on or off at the ownerTMs request, subject to carrier rules. Understanding automatic premium loans allows advisors to use the feature as a safety net without letting silent loan build'up undermine long'term protection.