Policy Loan

  • 1976 - Policy Loans, Society of Actuaries - 26p
  • Q Well, the focus on income payments, what he would get after retirement --
  • A You mean policy loans is what we’re talking about.
  • Q All right. The letter refers to income payments, correct?
  • A Um hum. Yes.
  • Q Is there any reference there to policy loans?
  • A No. But that’s what they were.

-- TRANSCRIPT OF TESTIMONY OF JAMES BARRETT <Agent>

2009 - NATIONAL SECURITY SYSTEMS, et al. Plaintiffs vs. ROBERT L. IOLA, JR., et al. - Case 3:00-cv-06293-AET -TJB Document 375 Filed 12/03/09 Page 91 of 117

  • In drawing a line between insurance policy loans and consumer finance, the NAIC argued that whole life policy loans do not make insurance companies ECOA "creditors."
  • The insurance companies do not extend, renew, or continue credit; nor do they arrange for such transactions.
  • Rather, despite the use of the word "loan," a policy loan is in substance an advance payment of the policy's cash surrender value.
  • It more closely resembles a structured temporary conversion from one type of asset into cash, particularly because if a policyholder does not repay the loan, the insurance company's recourse is simply to reduce the policy benefits by the outstanding balance of the loan.

mondaq.com/unitedstates/insurance-laws-and-products/557644/naic-draws-line-in-cfpb-sandbox

  • Dr. LUBIN ( interposing). May I just raise a question before you continue? It is quite evident that for the year 1938 the most profit able investment an insurance company could make was a loan to a policyholder.
  • Mr. Howe. With respect to the gross rate; yes.
  • Dr. LUBIN. And these funds that were loaned to the policyholders, I take it, are part of the reserves that were set apart, and in a sense is his own money?
  • Mr. Howe. There is an argument about whether it is his own money.
  • Dr. LUBIN. Although legally it may be not his, in a sense it is a sum set aside against his policy?
  • Mr. Howe. It is money which he paid in originally as premiums, less expense.
  • Dr. LUBIN. And which in the event he does not pay the loan is deducted from the policy?
  • Mr. Howe. That is right.  (p14808)

1940 - GOV - INVESTIGATION OF CONCENTRATION OF ECONOMIC POWER (TNEC) - PART 28: LIFE INSURANCE: OPERATING RESULTS AND INVESTMENTS

  • Policy loans secured against the cash surrender values of the contract followed the more general adoption of cash values, and were, like the extended insurance provisions, greatly deprecated by many on the theory that loans would tend to promote lapses.
  • Col. Jacob Green, late president of the Connecticut Mutual, remembered for a lifetime spent in untiring attacks upon the deferred or tontine dividend system, was a bitter opponent of the policy-loan idea. 

1909 - The Romance Of Life Insurance