The bottom line How do life insurance policy loans work? They let a permanent-policy owner borrow against cash value while the policy remains in force. The insurer charges interest, and the unpaid balance can reduce the death benefit. If the policy ends with a loan outstanding, the tax result can differ from an ordinary loan. … Read more

The bottom line What is a life insurance policy dividend? It is a non-guaranteed amount a participating life insurance policy may receive when the insurer’s experience creates divisible surplus. The payment can be taken in cash, applied to premiums, used for paid-up additions, or left on deposit, subject to the contract’s terms. A policy dividend … Read more

The bottom line What is direct recognition on policy loans? It is a method for setting dividends on a participating life insurance policy when the owner has a loan: the insurer accounts for the loaned portion separately, so the dividend credited to that portion may differ from the rate on unborrowed value. Direct recognition matters … Read more

The bottom line Can you repay a policy loan anytime? Usually, yes, but your contract controls the payment process. Many policies allow full or partial repayment, while unpaid interest increases the balance. That balance can reduce the death benefit and increase lapse risk. Check the policy statement and ask the insurer for the current payoff … Read more

The bottom line Is a high illustrated dividend credible? It can be a reasonable projection, but it is never a guarantee. Read the guaranteed and non-guaranteed columns together, confirm the scale used, and test how the policy works if the dividend changes before relying on the illustration. A high illustrated dividend can be useful for … Read more

The bottom line What is extended term nonforfeiture coverage? It is paid-up term insurance that uses a permanent policy’s cash surrender value to keep the original death benefit for a limited period when premiums stop. Key facts It uses a cash-value policy’s nonforfeiture value to buy paid-up term insurance. The death benefit can stay at … Read more

The bottom line How do vul policy loans affect coverage? A variable universal life policy loan can lower cash value, reduce the death benefit under the contract, and raise the chance of a lapse when charges and loan interest consume too much value. The loan is usually not immediately taxable, but a lapse or surrender … Read more

The bottom line Can reduced paid up insurance be reversed? Sometimes, but there is no universal undo button. A grace-period payment, reinstatement request, and new application are different paths. Your policy’s status, contract deadline, loan balance, and any evidence-of-insurability requirement determine what the insurer can restore. Restoration depends on whether the policy is still in … Read more

The bottom line What is cash surrender value? It is the money an insurer pays when you end a permanent life insurance policy, after subtracting any surrender charge and policy debt from the policy’s cash value. The amount can be lower than the displayed cash value, especially during the policy’s early years. The term describes … Read more

The bottom line Can dividend scales decrease after purchase? Yes. A participating whole life policy’s dividend is non-guaranteed and can be lower in a later year if the insurer’s financial experience changes. A scale change alone does not rewrite the policy’s guaranteed values, but loans, withdrawals, and dividend choices can change the policy’s results. Can … Read more