Policy
Policy Loan A policy loan is issued by an insurance company and uses the cash value of a person’s life insurance policy as collateral. Sometimes it is are referred to as a “life insurance loan.” Traditionally, policy loans were issued at a very low interest rate, but that is no longer universally true. If a borrower fails to repay a policy loan, the money is withdrawn from the insurance death benefit. How a Policy Loan Works If someone needs access to emergency cash, getting a policy loan, which accesses the cash value of a life insurance policy, is one option, but only if the policy is permanent life insurance, available as either whole life or universal life. Unlike term life insurance, which does not accumulate cash value, universal and whole life insurance have a cash component, especially later ...
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