What type of policies typically contain a policy loan feature?

Whole Life Insurance, as well as Universal Life Insurance, typically contain a policy loan feature. This feature allows policyholders to borrow against the cash value of their policy, which can be particularly advantageous in times of financial need.

Whole Life Insurance provides a guaranteed cash value accumulation over time, which is a key feature that supports the availability of loans. The policyholder can take a loan against this cash value and use it as needed, while the outstanding loan balance accrues interest. Importantly, the insured does not need to undergo a credit check for such loans, making them accessible when urgent funds are required.

Universal Life Insurance also supports the policy loan feature because it too has a cash value component, though this cash value may vary based on the performance of the investment component of the policy. The policyholder can access these funds through loans, allowing flexibility in their financial planning.

While Term Insurance does not have a cash value accumulation component, and thus does not feature policy loans, Whole Life and Universal Life cover the bases for policies that typically offer this benefit. Therefore, focusing on Whole Life and Universal Life Insurance is key to understanding the policy loan feature.