Policy Loan
Definition
- A loan where an individual leverages the cash value of their life insurance policy. The death benefit is used as collateral for the policy loan, and should the policyholder default on the loan, the lender can withdraw the funds owned from the death benefit. Also known as a "life insurance loan."
Synonyms
death benefit loan, life insurance loan
Related Terms and Acronyms
- Cash Surrender Value (CSV) — Acronym, Important,
- The liquid value of an insurance policy if the policyholder voluntarily cancels the policy before maturity or an insured event.
- Collateral — Definition,
- Any property pledged as security for repayment of a debt.
- Creative Financing — Definition,
- An innovative or unusual way of structuring a home loan that allows the buyer to buy the house.
- Death Benefit (DB) — Acronym, Very Important,
- A payment or series of payments made to the beneficiaries of a life insurance policy.
➥ An amount paid to a beneficiary in a life linsurance policy. - Insurance Policy — Definition,
- A legal contract between an insurer and entity that specifies what the insurer is required to cover and any benefits the insured entity is entitled to.
- Irrevocable Beneficiary — Definition,
- A life insurance or segregated fund beneficiary whose benefit cannot be revoked or modified in any way without his or her consent.
- Life Insurance — Definition, Very Important,
- An arrangement where an insurer agrees to pay a benefit to one or more beneficiaries in the event of the policyholder's death.
➥ CanEquity offers life insurance. - Living Benefits — Definition,
- The option for a life insurance policyholder to receive a portion of their death benefit in advance of their death.
- Loan — Definition,
- Letting another party use something of value temporarily.
- Non-recourse Debt — Definition,
- A loan secured by collateral where the borrower is not personally liable.
- Spin-Life — Definition,
- A financial industry that specializes in buying life insurance policies from individuals or convincing individuals to take out new life insurance policies with an investor as a beneficiary.
- Surrender Charge — Definition,
- A charge levied when a life insurance policyholder cancels his or her policy.
- Surrender Rights — Definition,
- The contractual right for a life insurance or annuity policyholder to cancel his or her policy.
- Transferable Insurance Policy — Definition,
- A life insurance policy that can be sold to another party through a viatical settlement.
- Viatical Settlement — Definition,
- A contract where an individual agrees to sell his or her life insurance policy to a third party before their death.
