How Policy Loans and Withdrawals Work

A withdrawal removes value from the contract. A loan borrows against it, with interest charged and the loan balance offsetting available values and the death benefit.

Loan interest, crediting method, and whether a loan is fixed or participating all affect long-term outcomes.

If a policy with an outstanding loan lapses or is surrendered, taxable income may result. This is one reason ongoing review matters.

This article is educational and general in nature. It is not legal, tax, accounting, or investment advice, and it is not a recommendation of any product or strategy. Policy features, riders, and availability vary by carrier and state, and coverage is subject to underwriting and carrier approval. Non-guaranteed values depend on credited interest, policy charges, funding, withdrawals, loans, and other policy activity.