Policy Loan
Definition of "Policy loan"
Amount that the owner of a life insurance policy can borrow at interest from the insurer, up to the cash surrender value. If interest is not paid when due, it is deducted from any remaining cash value. When the cash value is exhausted, the insurance ceases. If the insured dies, any outstanding policy loan and interest due are subtracted from the death benefit. The policy owner may repay the loan in whole or in part at any time; or may continue the loan, as long as the interest plus the principal of the loan do not equal or exceed the cash value (in essence only the interest on the loan must be serviced) or until the policy matures. Insurance companies reserve the right to delay payment of a policy loan for up to six months to protect their solvency, but this has rarely been done since the Depression of the 1930s.
Popular Insurance Terms
Person for whom the trust was created and who receives the benefits thereof. In many instances a trust is established to prevent the careless exhaustion of an estate. For example, the ...
Clause in some current ASSUMPTION WHOLE LIFE INSURANCE policies Such as UNIVERSAL LIFE insurance that allows unscheduled premiums to be paid at any time prior to the policy's maturity date, ...
Insurance company that transfers a risk to a reinsurance company. ...
Type Of GUARANTEED INVESTMENTS CONTRACT in which funds for the contract are put in the insurance company's general account ...
Legal instrument posted by a contractor or craftsman to guarantee that completed work is free of flaws and will perform its intended function for a specified period of time. ...
Type of coverage of property owned by one person at several locations, including merchandise, materials, fixtures, furniture, specified machinery, betterments, and improvements made by ...
Low-cost life insurance providing coverage only for a limited time, such as one year, five years, or to age 65. Term insurance costs less at younger ages than a comparable amount of CASH ...
Act that requires the Department of Labor (DOL) to have a formal program to educate the public about the importance of saving for retirement. The DOL is also required to educate the public ...
Coverage through an endorsement to the personal automobile policy (pap) to extend its protection against accidents within a 25 mile radius of the U.S. border. This coverage is excess over ...
Have a question or comment?
We're here to help.