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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Policy loans outstanding at the end of 1970 equaled $14.
Tax advantages, including income-tax-free death benefit to beneficiaries, cash value that grows tax-deferred, and policy loans from the available cash value that are income-tax-free while the policy remains in force3.
The policyowner can use partial surrenders or policy loans to help pay the school expenses.
The DPL is grounded in the development goals of Turkey and is the first in a series of two Development Policy Loans.
This firm's connection with the construction business doesn't surprise Wessel, who observes that clients of his practice that have also taken out policy loans are active in this space, as well as the real estate and mortgage businesses.
The form might ask questions such as what the purpose of the coverage is, whether the buyer anticipates needing it for the rest of his or her life, whether he or she needs flexibility of premium payments, expects to take policy loans, and so forth.
However, if the insurance policy was issued after dune 8, 1997, the mortgage company would not be able to claim any of the interest expense related to policy loans, even up to proceeds of $50,000 (Sec.
Smith (1982) argues that a life insurance policy can be viewed as an options package, providing the policyowner with options such as policy loans and guaranteed renewal at fixed premium rates in addition to death benefits.
1 Policy loans will reduce available cash values and death benefits, and may cause the policy to lapse or affect any guarantees against lapse.
As long as the policyowner continues to pay premiums, the policy remains in force, but the death benefit is the face amount reduced by any outstanding policy loans and unpaid interest on the policy loans.
However, the court also decided that a trial on the facts of the program would be needed to determine whether the company should have been allowed to deduct the interest it paid on policy loans.
Life expectancy and future premium payments are the primary factors used to determine the payout, which is reduced by policy loans.