Provisions Specific to Cash Value Policies

Question 1

Policy Loans Provision

Answer 1

A policy loan may be made from a cash value policy once there is sufficient cash value to borrow against. In most policies, cash value must be made available to borrow against after 3 years.

Question 2

Partial Withdrawals or Partial Surrenders

Answer 2

A partial withdrawal of cash value is permitted in a Universal or a Variable Universal Life policy. A partial withdrawal is considered a partial surrender of the policy. A partial surrender is actually paid from the policy value and either reduces the amount of the death benefit or the amount of cash value in the policy.

Question 3

Surrenders

Answer 3

The owner of a cash value policy may surrender the entire policy. This action will cancel the insurance coverage. The policyowner is entitled to receive the cash surrender value in the policy. Universal life and variable universal life policies may have a surrender charge schedule which lasts 10-20 years.