Whole Life Insurance
What is a life insurance policy loan?
A life insurance policy loan allows you to borrow against the cash value of your whole life or universal life policy. Policy loans are not taxable and do not require repayment. However, unpaid loans reduce the death benefit. Interest accrues on the loan. If the loan plus interest exceeds the cash value, the policy may lapse.
Key Points
- Policy loan: borrow against the cash value of your policy
- Not taxable — not considered income
- No repayment required — but unpaid loans reduce the death benefit
- Interest accrues on the loan
- If loan + interest exceeds cash value: policy may lapse