Definitions for "Policy loan"
nonforfeiture provision in cash value life insurance policies where the policyowner may borrow from the cash value of the policy. The interest rate that is charged on such a loan is usually significantly lower then borrowing from a bank. Because this loan cannot be turned down by the insurance company, it may be wise to use this type of loan for conditions where other sources of borrowing are no longer available or too costly. If the insured dies before the loan is repaid, the loan plus any interest will be deducted from the death benefit.
(See "Loan.")
A provision in a life insurance policy granting the owner the right to borrow the policy's cash value.
Keywords:  prepaid, positive, carry, interest
positive carry prepaid interest