Policy loan

(redirected from Life Insurance Loan)

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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
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References in periodicals archive ?
Loan value is also known as the policy loan or life insurance loan. The policyholder may take out a loan against his insurance policy as the collateral.
See also: Not all life insurance loan provisions are created equal
Borrow from a home equity mortgage and use the proceeds to pay off the life insurance loan (assuming that payments on the home equity mortgage would be deductible).
Related: Not all life insurance loan provisions are created equal
See also: Not all life insurance loans are created equal
To account for potential deterioration in asset characteristics, the agency stressed the portfolio composition regarding three-month plus arrears, as well as interest-only and life insurance loans to the maximum allowed under the replenishment criteria outlined in the transaction documentation.

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