01.Core Concepts

A policy loan provision allows the policyholder to borrow the cash value The policyholder must pay interest on the loan to offset the loss of interest to the insurer A policy could lapse if the policyholder does not repay a loan and the total indebtedness exceeds the available cash value The major advantage of a policy loan is the relatively low rate of interest that is paid The major disadvantage of a policy loan is that the policyholder is not legally required to repay the loan, and the policy might lapse if the indebtedness exceeds the available cash value ‹#›