Policy Loan

AAA

DEFINITION of 'Policy Loan'

A loan issued by an insurance company that uses the cash value of a person's life insurance policy as collateral.

Sometimes referred to as a "life insurance loan."

INVESTOPEDIA EXPLAINS 'Policy Loan'

Traditionally, these were loans issued at a very low interest rate, but that is no longer universally true. If the borrower fails to repay the loan, the money is withdrawn from the insurance death benefit.

RELATED TERMS
  1. Life Insurance

    A protection against the loss of income that would result if ...
  2. Loan

    The act of giving money, property or other material goods to ...
  3. Whole Life Insurance Policy

    A life insurance contract with level premiums that has both an ...
  4. Variable Life Insurance Policy

    A form of permanent life insurance, Variable life insurance provides ...
  5. Lloyd's Of London

    A British insurance market where members join hands as syndicates ...
  6. Reinsurer

    A company that provides financial protection to insurance companies. ...
Related Articles
  1. The Importance Of Your Credit Rating
    Credit & Loans

    The Importance Of Your Credit Rating

  2. Permanent Life Policies: Whole Vs. Universal
    Options & Futures

    Permanent Life Policies: Whole Vs. Universal

  3. Getting the Whole Story on Variable ...
    Options & Futures

    Getting the Whole Story on Variable ...

  4. Life Insurance: How To Get the Most ...
    Retirement

    Life Insurance: How To Get the Most ...

comments powered by Disqus
Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  2. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  3. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  4. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
Trading Center