Automatic premium loan provisions are found in life insurance policies that build cash value. If the insured has failed to pay the premium due by the end of the grace period, the insurance company will “loan” the premium to the insured using the insured’s cash value. The advantage of this provision is that the policy remains in force even when the insured is unable to pay the premium. For example, suppose Ellen has a $100,000 whole life insurance policy with $8,000 cash value. Ellen pays $250 quarterly for the coverage, but fails to pay the most recent quarter. Under the automatic premium loan provision, the insurance company will loan Ellen $250 of her $8,000 cash value to keep the insurance in force. Ellen can repay the loan or allow future cash value accumulations to repay the loan. The insurance company charges a nominal rate of interest on the loan. (See Non-forfeiture Options).