loan from an insurance company secured by the cash surrender value of a life insurance policy. The amount available for such a loan depends on the number of years the policy has been in effect, the insured's age when the policy was issued, and the size of the death benefit. Such loans are often made at below-market interest rates to policyholders, although more recent policies usually only allow borrowing at rates that fluctuate in line with money market rates. If the loan is not repaid by the insured, the death benefit of the life insurance policy will be reduced by the amount of the loan plus accrued interest.

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 policyowner 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.

loan from an insurance company secured by the cash surrender value of a life insurance policy. The amount available for such a loan depends on the number of years the policy has been in effect, the insured's age when the policy was issued, and the size of the death benefit.