The policy feature that allows borrowing against the cash value with tax-deferred growth is called what?

The policy feature that allows borrowing against the cash value with tax-deferred growth is called what?

• A. Death benefit
• B. Cash account
• C. Living benefit
• D. Loan value

Answer: (D)

Borrowing against the policy’s cash value is done through a policy loan, using the loan value of the contract. The cash value grows tax-deferred, and taking a loan against it doesn’t create taxable income as long as the policy remains in force. If the loan isn’t repaid, it reduces the cash value and also the death benefit paid to beneficiaries. The other terms describe different aspects—the death benefit is what’s paid at death; a cash account isn’t the standard term for accessing cash value; living benefits cover funds available during the insured’s lifetime for certain needs. So the feature described—borrowing against the cash value with tax-deferred growth—refers to the loan value.

Borrowing against the policy’s cash value is done through a policy loan, using the loan value of the contract. The cash value grows tax-deferred, and taking a loan against it doesn’t create taxable income as long as the policy remains in force. If the loan isn’t repaid, it reduces the cash value and also the death benefit paid to beneficiaries. The other terms describe different aspects—the death benefit is what’s paid at death; a cash account isn’t the standard term for accessing cash value; living benefits cover funds available during the insured’s lifetime for certain needs. So the feature described—borrowing against the cash value with tax-deferred growth—refers to the loan value.