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
Nonparticipating life insurance under which the first few annual premiums are smaller than would be the case under a traditional nonparticipating policy. While the maximum amount of these ...
Contracts of reinsurance in which expected income from investments is a major component of the UNDERWRITING process. Also, the ultimate liability of the reinsurer is limited. The reinsurer ...
Surcharge, in retrospective rating of property and liability insurance, added to the basic premium rate charged to reflect fixed cost of adjusting or settling losses. ...
Homeowners policy to cover the owner of a townhouse. ...
Organization of trial attorneys who specialize in the representation of defendants who become subject to tort actions. Generally, these tort actions involve bodily injury or personal injury ...
Combination of coverages from property and liability policies. ...
Coverage for shippers of certain radioactive materials, such as medical or commercial isotopes, for direct loss or damage by radioactive contamination; does not cover transport of ...
Theory, named after the British economist John Maynard Keynes, that deals with current consumption at the expense of saving. This theory has important implications for life insurance ...
Title of a published set of rules, adhered to by member companies of major property and liability associations, that stipulate how losses should be adjusted when the same loss is covered by ...
Have a question or comment?
We're here to help.