Policy loan

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Policy loan

A loan often made at a below-market interest rate from an insurance company to a policyholder that is secured by the cash surrender value of a life insurance policy.

Policy Loan

A loan that an insurance company extends to a policyholder with the cash surrender value of the policy as collateral. That is, if the policyholder does not repay the loan, the insurance company may take an equivalent amount out of the policyholder's death benefit. The nature of collateral has historically meant that policy loans carry low interest rates, but this is not always true. It is also called a life insurance loan.
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According to court filings, the bulk of the money from the three life insurance loans is used by Stuart as part of a fraudulent transaction.
Consumers can use life insurance loans to finance major items, such as auto purchases, college educations and weddings for their children, and business owners can turn to life insurance loans to finance equipment purchases and to expand facilities.
By working with LifeQuest World Fund, organizations can create an endowment program using funds generated by premium life insurance loans.
18 /PRNewswire/ -- The National Association of Life Underwriters (NALU) said today it will actively oppose a proposal now before the House Ways and Means Committee to retroactively tax business life insurance loans.

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