Provides that if a life insurance premium is not paid, a policy loan in the amount of the premium due will automatically be made at the end of the grace period, provided there is enough available cash value to cover the loan and its interest for one year.
Generally applicable to fixed premium policies such as whole life, an "APL" provision will allow the insurance company to borrow the due and payable premium from cash values if the premium hasn't been paid after 31 days from the premium due date. This provision prevents unpaid premium from putting the policy into a "lapse" condition.