An insured must pay the specified interest rate to borrow his own "savings" when a loan is made on a whole life policy.

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When a loan is made on a whole life policy, the insured must pay the specified interest rate to borrow his own "savings". This is because the loan is taken from the cash value of the policy, which is essentially the savings portion of the policy. The interest rate for the loan is typically lower than other forms of credit, but it still needs to be paid back with interest. If the loan is not paid back, it can reduce the death benefit paid out to beneficiaries.

An Insured Must Pay the Specified Interest Rate to Borrow