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
Same as term Line Limit: maximum amount of a specified type of insurance coverage, according to underwriting guidelines, that an insurance company feels it can safely underwrite on a ...
Vehicle that is available to anyone in the United States as a means for savings in a tax-exempt fashion for college, graduate, or professional schools or other eligible accredited business, ...
Quality of investments of insurance companies. State insurance regulators establish rules for company investments. Authorized investments vary, depending on whether a company is a life ...
Landmark legislation passed by Congress providing the first regulation of the securities markets. The law, enforced by the securities and exchange commission (sec), requires registration of ...
Distribution of a deceased beneficiary's share of an estate among all of his or her living heirs. Contrast with per stirpes. ...
Reinsurance: surplus reinsurance contracts under which the agreement between an insurer and a re insurer is based on the ceding company's line guide, such that the amount re insured is ...
Act that regulates the variable dollar insurance products (equity related) sold by insurance companies. The act includes regulations that stipulate: the variable dollar insurance products ...
Process of distributing the costs associated with losses and risks over a number of insureds. ...
Date of the initial annuity payment. ...
Have a question or comment?
We're here to help.