Question

Which of the following statements is incorrect regarding Whole Life policy loans?

A. Loans do not need to be repaid.
B. At death, outstanding loans plus interest are subtracted from the death benefit.
C. Only fixed interest rates can be charged against the loan.
D. Loans may be delayed by the insurer for up to 6 months.

Answer 1

Loans taken out against a Whole Life insurance policy must be repaid, as they are borrowed against the cash value of the policy.

Step-by-step explanation:

The incorrect statement regarding Whole Life policy loans is option A: Loans do not need to be repaid. In fact, loans taken out against a Whole Life insurance policy must be repaid, as they are borrowed against the cash value of the policy. This borrowed amount, along with interest, is subtracted from the death benefit when the insured person passes away.