What does the 'Loan values clause' determine?

The 'Loan values clause' specifically addresses the conditions under which a policyholder can take out a loan against the cash value of their insurance policy. This clause typically outlines various factors, including how much can be borrowed, the interest rates applicable to these policy loans, and the terms surrounding repayment.

When the clause indicates interest rates, it provides essential information about the cost of borrowing against the policy, which can affect the policy’s overall value and the financial strategy of the policyholder. Understanding this clause is critical for policyholders as it guides them in effectively managing the cash value of their policy and making informed decisions regarding loans.