Policy Loan

What Does Policy Loan Mean?
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 If the borrower fails to repay the loan, the money is withdrawn from the insurance death benefit.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

Life Insurance
Loan
Variable Life Insurance Policy
Whole Life Insurance Policy
More Related Terms

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