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
Agent with the authority from an insurance company to prepare and to place into business an insurance policy. ...
credit reflected on a ceding company's annual statement, showing reinsurance premiums ceded and losses recoverable from the reinsurer. ...
Coverage under the Homeowners Form-4 (HO-4) for the insured's personal property and loss of use against fire and/or lightning; vandalism and/or malicious mischief; windstorm and/or hail; ...
Addition to a business property insurance policy to cover loss of earnings, subject to a monthly limit, in the event that property of an insured is destroyed and a business cannot continue. ...
Coverage for a mortgagee where real or personal property, used as security for a loan, is damaged or destroyed. For example, a bank (mortgagee) lends money to an individual (mortgagor) who ...
Reinstatement of an insurance policy or bond to its original face amount (face of policy) after the payment by the insurer of a loss. The purpose of this type of coverage is to indemnify ...
Same as term Cargo Insurance: shipper's policies covering one cargo exposure or all cargo exposures by sea on all risks basis. Exclusions include war, nuclear disaster, wear and tear, ...
Coverage on cargo in overseas ships for war-caused liability excluded under standard ocean marine insurance. Not covered is cargo awaiting shipment on a wharf, or on ships after 15 days of ...
Accounting method used to reduce income taxes on distributions from qualified pension or retirement plans. Ten-year averaging was repealed by the tax reform act of 1986 but is still ...
Have a question or comment?
We're here to help.