Which of the following describes a policy that uses borrowed cash value to pay missed premiums automatically?

A policy that utilizes borrowed cash value to automatically cover missed premiums is known as an automatic premium loan. This feature is typically included in whole life insurance policies and allows the insurer to use the policy's cash value as a loan to cover premiums that the policyholder failed to pay on time. By doing so, the policy remains in force, and the insured does not face the immediate risk of policy lapse due to non-payment.

This mechanism is particularly beneficial for policyholders who may face temporary financial difficulties, as it provides a safety net by allowing the policyholder’s cash accumulation to keep the insurance active. The loan against the cash value incurs interest, which must be considered in the total costs of maintaining the policy, but it prevents disruption in coverage during challenging times.

Other options such as reinstatement refer to the process of reactivating a lapsed policy, flexible premium payment pertains to policies that allow for variable premium payments, and level premium payment is associated with policies that maintain the same premium cost through the life of the policy. Each of these choices serves different purposes and does not directly relate to the automatic borrowing of cash value to pay missed premiums.